Finance: Balance of Payments
	 — 
	Question

Lord Sheldon: To ask Her Majesty's Government what is their latest forecast for the balance of payments in the current financial year.

Lord Davies of Oldham: My Lords, the Government forecast for each calendar rather than financial year. The forecast for the balance of payments deficit for 2009 is 3.5 per cent of GDP, or £48.5 billion: up from a deficit of 1.7 per cent of GDP in 2008, or £24.5 billion.

Lord Sheldon: My Lords, I thank my noble friend for that reply. Although the Treasury does not officially forecast the balance of payments other than at Budget time and on pre-Budget occasions in the autumn, I understand that the Chancellor of the Exchequer may not publish the usual spending review this autumn. Can my noble friend confirm whether this is so? The assessment of the borrowing of £175 billion this year and the next is that it is large and continuing, with necessary expenditure cuts affecting our economic recovery. When does he expect the financial position to be restored, with no further borrowing?

Lord Davies of Oldham: My Lords, those are two fairly fundamental questions. Both are wider than and somewhat remote from the balance of payments issue, which was the basis of my noble friend's original Question, although I had anticipated that it might go a little wider in this short exchange. He will have to wait for any commitment on the pre-spending position. I cannot comment at this stage, but he will appreciate from the figures that we have on the balance of payments deficit that the United Kingdom's economy remains one of the most competitive. We are actually benefiting at present. Repatriated income from investments is in fact less than earnings, so our balance of payments figures are better in those terms, but my noble friend will recognise that we are addressing ourselves to the whole question of economy recovery and that developments in the balance of payments are a factor in that.

Lord Forsyth of Drumlean: My Lords, does the Minister agree that the Government's plans to borrow an additional £900 billion through the gilts market can be achieved only by a substantial increase in interest rates? What does each percentage increase in interest cost the Government?

Lord Davies of Oldham: My Lords, they are significant figures, which are unparalleled in recent decades, as the noble Lord will appreciate. But he also knows that they are reflective of a strategy of investment in this economy, which is being pursued by every advanced economy in the world, including, most importantly, the United States and, to a great extent, China. In so far as public deficits occur from this, those are a price which has to be paid in order to minimise the sharpness of the recession and to keep the level of unemployment as low as we can. I am sure that the whole House applauds those developments.

Lord Peston: My Lords, I think that I may have to congratulate my noble friend. Apart from being Deputy Chief Whip, he is also now a Parliamentary Under-Secretary at Defra. Just to cheer him up a bit, Defra is an area that does not interest me at all.
	There are two interesting questions about the balance of payments. We have been in deficit in this country since, I think, 1985, which means that even though economists always say, "This can't go on", it always seems to go on. Specifically on the present state of affairs, bearing in mind that it is a duty of an economist never to look on the bright side, otherwise we would cease to be the dismal science, would one be accused of being complacent by saying that the remarkable thing about the balance of payments at present is that we do not seem to have the slightest sign of an emergency or crisis on the horizon? Am I being complacent in suggesting that possibility?

Lord Davies of Oldham: My Lords, if my noble friend is to introduce complacency to our discussion, I hope that he will concentrate on Defra in due course and make life a little easier for me. On the issue that he raises, it is obvious: our balance of payments forecast for our worst year is below the balance of payments deficit in the mid-1980s under a previous Administration. Therefore, this does not feature as a factor which should concern us over much, save for the obvious fact that the country has to earn its way. It is important that we move from deficit with regard to growth. The forecast for the end of 2009 is of deficit, but we look forward to a resumption of growth next year.

Baroness Noakes: My Lords, in 1997 we had a surplus on trade in goods and services of £4 billion. Last year, we had a deficit of 10 times that amount. If you look behind those figures, last year we had a deficit on goods alone of £93 billion. Does the Minister think that these are signs of good economic management?

Lord Davies of Oldham: My Lords, it is a sign of economic management in difficult times. I notice that the noble Baroness did not take the opportunity of defending past strategies of her party that led to balance of payments deficits greater than we are facing in the middle of this worldwide crisis, which everyone recognises is of a unique severity since the 1930s. She will accept that these deficits have to be accounted for. They are part of the necessary recovery with regard to the economy. She will delight in the fact that we see improvements in the position in due course.

Lord Lea of Crondall: My Lords, my noble friend mentioned China and the United States. Last night on Radio 4, the deputy governor of the Bank of China said that the investment and trade relationship with the United States would decline and that that with the European Union would increase substantially. Does my noble friend agree therefore that talk in this House and elsewhere about China and globalisation versus the European Union is wrong and that we must do everything possible to be fully integrated into the European economy and everything that goes with it?

Lord Davies of Oldham: My Lords, China has certainly indicated how significant the European economy is in the demand for its products, which are, of course, part of its strategy for recovery. As for the United States, China will also, of course, be concerned about the progress of President Obama's strategy of reinvestment in the economy. Significant though China is—along with India and other emerging economies—it is still the case that, until the United States economy makes a significant recovery, none of us can anticipate recoveries elsewhere.

Armed Forces: Human Rights Act
	 — 
	Question

Lord Astor of Hever: To ask Her Majesty's Government what is their reaction to the judgment of the Court of Appeal on 18 May regarding the applicability of the Human Rights Act 1998 to members of the Armed Forces operating in combat zones.

Baroness Taylor of Bolton: My Lords, first, I am sure that the whole House will wish to join me in offering sincere condolences to the family and friends of Private Robert McLaren from the Black Watch, 3rd Battalion The Royal Regiment of Scotland, and Lieutenant Paul Mervis from the 2nd Battalion The Rifles, who were killed in operations in Afghanistan this past week, and to the families of the RAF reservist and the air cadet who died in the accident at the weekend.
	Turning to the Question, as my right honourable friend, the former Secretary of State, said in the other place on 1 June:
	"We are strongly committed to protecting the human rights of our armed forces. However, the implications of the recent Court of Appeal judgment in the case arising from the tragic death of Private Jason Smith could open the door to routine legal challenges against the Ministry of Defence to decisions made by service personnel entrusted with the conduct of operations. The Chief of the Defence Staff has made these concerns clear in his own message to the armed forces. I am urgently considering the matter, and will decide shortly whether we need to appeal the decision to the House of Lords".—[Official Report, Commons, 1/6/09; col. 1.]

Lord Astor of Hever: My Lords, 10 soldiers have been killed in Afghanistan in less than a month, all but one from explosions, and we on these Benches send our condolences to all their families and also to the families of those killed in the jet accident.
	I thank the Minister for her Answer. We welcome the fact that the MoD has offered commanding officers indemnity from prosecution under human rights law. Will the Minister put the Chief of the Defence Staff's letter to commanding officers in the Library?
	This judgment results from a conflict between English common law, which recognises that the duties of the Armed Forces include putting one's own life in peril and ordering others to do so, and European human rights law, which emphasises protection of life as a priority. If the Government do not appeal, or an appeal fails, will the Government undertake to include in primary legislation provisions that human rights cannot prevail in combat zones, as this judgment is causing serious operational problems for the Armed Forces?

Baroness Taylor of Bolton: My Lords, first, I am very happy to provide a copy of the CDS's statement to the chain of command. It is an important one, setting out very clearly that he wants to assure commanders at all levels that the judgment does not alter the situation in respect of their authority to make operational decisions. That is extremely important and something that we must ensure continues. This is a very difficult and complex area; we support human rights, both in general and in the case of our armed services. The Ministry of Defence accepted that the Human Rights Act applied in the tragic case of Private Smith, but we also believe that operations must go ahead effectively and that every split-second decision that is taken in the field should not be revisited in a court of law later. We do want clarity and that is what we will seek, but we are still taking advice on the situation and we will make a decision in due course.

Lord Campbell of Alloway: My Lords, is the Minister aware that an amendment was tabled to the Human Rights Act to exclude the Armed Forces on grounds of practicability? It was spoken to; it was supported by noble and gallant Lords. Consultation between certain noble and gallant Lords and the Government ensued, and certain assurances were given. The amendment was then withdrawn. The noble Baroness who gave those assurances happens to be present in the House. What were those assurances? Were they that they would not affect operational activity?

Baroness Taylor of Bolton: My Lords, we do not believe that there has to be a conflict in that way, which is why we are exploring the situation carefully. I am not a lawyer, and I was not in this House at the time of that debate, but it seems to me that we need some clarity to back up the assurances which the CDS has given. It is not a simple question of indemnity, because action would be taken against the Ministry of Defence and not an individual commander. We want a clear legal framework for the avoidance of doubt, because, as I said earlier, operations have to go ahead effectively. The CDS's statement was aimed at assuring those commanders in the field that that was the case.

Lord Lester of Herne Hill: My Lords, I join in the expression of condolence towards the loved ones of our great soldiers who have died heroically in combat. I fully agree with the way in which the balance has been expressed by the Minister. Does she know that, during the Court of Appeal hearing, the Government rightly conceded that the Human Rights Act applies to protect soldiers' human rights at military bases, and that the Court of Appeal said that it did not seem very logical for it not to apply when they were in an ambulance or in the desert? Does the Minister also know that the court made very sensible recommendations as to what the coroner should do? I can find nothing in the judgment which suggests a conflict between the vital need for the military to be under direct control in operational matters and at the same time their having their human rights protected. Is that the view that she provisionally accepts?

Baroness Taylor of Bolton: My Lords, as I said, I am no lawyer and I would be very cautious about what I said on any matter. We accept that human rights legislation applies on military bases and, as I said, we acknowledged that in the case of Private Jason Smith in terms of the situation that arose. We accept that we should be very cautious about human rights overall and have a big responsibility. We take our duty of care very seriously. We spend a lot of money improving equipment and in training and tactics, all to minimise risk. However, it is impossible in a difficult, operational situation to rule out risk entirely. Our commanders have a difficult responsibility which they exercise with every care. Therefore, we must have clarity so that operations can go ahead effectively and that every decision made on operations is not gone through in great detail by a court at some later stage.

EU: Transport of Horses
	 — 
	Question

Lord Higgins: To ask Her Majesty's Government whether they will press the European Union to widen its review of European Union Council Regulation 1/2005 on transport of horses to include journey length, watering, feeding, rest periods and fitness to travel.

Lord Higgins: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as my daughter is an equine veterinary surgeon.

Lord Davies of Oldham: My Lords, the European Commission has already indicated its wish to review regulation 1/2005, concentrating on journey times, stocking densities and satellite tracking. Official proposals are awaited and will be carefully assessed. Stakeholders will be fully engaged. The Government have supported this review and emphasise the importance of appropriate rest periods and feeding and watering breaks.

Lord Higgins: My Lords, I am most grateful to the Minister for that helpful reply. It is clear from the latest survey carried out by the charity World Horse Welfare that the existing regulations on the export of live animals—horses in particular—for slaughter are not being enforced. Will he urge the Commission to work on that aspect of it? As the Minister has just said, the Commission has brought forward its review of the regulations, which was due in 2011. Will he seek to ensure that it covers not only the items which he has just mentioned but fitness to travel and checks on fitness to travel, since the indications are that there are not only welfare issues here but a danger to health?

Lord Davies of Oldham: My Lords, I am grateful to the noble Lord for the points that he makes. We want to see the European Commission regulations improved and we have been pressing for that, not least because we operate our own rules, which are better than the European regulations. We are nevertheless worried that we could be tested in terms of our conflict over European regulations. Therefore, we want to ensure that our position is four-square with Europe on the basis that Europe approaches our welfare measures. As the noble Lord indicated, there are a number of issues to be raised with regard to Europe in terms of the nature of the rules; but, as he indicated in his supplementary question, one of the crucial things is enforcement, at which we in the United Kingdom are rigorous—which is not the case all over Europe.

Lord Lester of Herne Hill: My Lords, the figures produced by World Horse Welfare are horrific. If the Government are unable to persuade the EU to widen its review, will they consider asking the redoubtable Joanna Lumley to become their enforcer, preferably as a Member of this House, since she might be able to succeed where they may fail?

Lord Davies of Oldham: My Lords, I am certainly prepared to meet Joanna Lumley to discuss this issue further.

Noble Lords: Oh!

Lord Davies of Oldham: My Lords, I emphasise that we anticipate that the European Union's commitment to review regulation 1/2005 indicates a significant step in the right direction. I hasten to add that all our organisations concerned with the welfare of animals have been putting in the strongest representations on this front, and the noble Lord can rest assured that we will pursue this issue with the utmost urgency.

Lord Lea of Crondall: My Lords, here is another role for the European Union. Is my noble friend aware that in 1959, I chaired a meeting at the Cambridge Union for Sean Lemass, the Taoiseach—the first time a Taoiseach had spoken in this country? Entry into the chamber was impeded by a demonstration about Irish horses being sent to knackers' yards in Belgium. Is it not self-evident that we must work on a European basis—and take a little less than 50 years to get to a solution?

Lord Davies of Oldham: My Lords, my noble friend is right that I did not know about his activities in 1959. Of course, I entirely follow the point of his argument, namely that the higher standards in the United Kingdom are ones that we want translated into European regulation in the redrafting that will take place, and that we want then to see the regulation enforced.

Lord Taylor of Holbeach: My Lords, I join those who have congratulated the Minister on his appointment. If any doubt existed as to his status, it could not have been because he failed to pass the loyalty test—it could only have been because he is already fully stretched as the sweeper for the Government on so many portfolios. The figures referred to by my noble friend Lord Higgins—37 per cent of horses arriving in Italy were not fit to be transported—speak for themselves. Would the Minister not agree that differentials in standards of animal welfare across the board represent a serious distortion to the single market, as well as an affront to its values?

Lord Davies of Oldham: My Lords, I am grateful to the noble Lord for his initial remarks. Loyalty is easy to a principled Government. I emphasise that I concur entirely with his illustration, and he is quite right about the Italian situation. Would that it were the only instance where the welfare of animals in transit was not satisfactory. The answer is certainly to have better rules and regulations; but I reiterate the point made by the noble Lord, Lord Higgins, that enforcement is also important.

Lord Pearson of Rannoch: My Lords, first, in that case, can the Minister be very daring, break the normal rules of secrecy over European legislation and share with us how the votes stacked up on this issue on the Council? Secondly, is it really acceptable that we in the United Kingdom, with our high standards of animal welfare, should be bossed around by Brussels on this issue?

Lord Davies of Oldham: My Lords, the second point is readily answered. On his first point about how the votes stacked up, the fact that a revision is being carried out is an indication that the nation states of Europe are all too well aware that present standards are not high enough.

Lord Dykes: My Lords—

Lord Hunt of Kings Heath: My Lords, we are now into the 24th minute.

Public Transport: Alcohol
	 — 
	Question

Lord Roberts of Llandudno: To ask Her Majesty's Government what proposals they have to regulate further the sale and consumption of alcohol on public transport.

Lord Adonis: My Lords, the Government are committed to reducing crime, anti-social behaviour and the fear of crime wherever it occurs in the transport system and whatever the cause. Each transport mode already has robust provisions allowing operators to control the sale and consumption of alcohol. As such, there are no plans to regulate this further.

Lord Roberts of Llandudno: My Lords, I thank the Minister for his reply and congratulate him on his new responsibilities. At the same time, I say a word of appreciation to the many thousands of devoted public employees who work on the transport networks. We particularly congratulate the chief constable of the British Transport Police on his knighthood. Is the Minister aware that at certain times and on certain routes, usually later in the day, many passengers have a very uncomfortable time as a result of a tiny minority who cause disturbances because of alcohol intake? Can he tell us how many alcohol-related incidents are recorded annually by the British Transport Police and what steps he is taking to make our trains less stressful and threatening?

Lord Adonis: My Lords, first, I thank the noble Lord for his kind opening remarks. When I was introduced into the House four years ago, somebody was heard to mutter, "My God, it's child labour". I hope that I have grown up a little since then, although I note that I am among only 18 per cent of the House not eligible for a free bus pass. I echo the congratulations that the noble Lord offered to Ian Johnston, the chief constable of the British Transport Police, who is retiring shortly from that office, having done a superb job. I think that he takes particular pride in the fact that he retires at a time when recorded crime on the rail network is falling sharply; the most recent statistics show that, overall, notifiable crime on Britain's railways has fallen by 4.5 per cent in 2008-09 over the year before. We cannot break that down into particular categories, but that reflects an improved situation on the railways, including, I hope, in respect of crime related to alcohol.

Lord Hanningfield: My Lords, I, too, congratulate the noble Lord on his promotion to Secretary of State. I do not know how long it is since we had a Secretary of State for Transport in the House of Lords—I have not done that research—but it is a most unusual situation. We all share his enthusiasm for high-speed trains; I hope now that as Secretary of State he will be able to find the money to deliver some. We shall look at that with interest. I also hope that, now that he has been elevated to Secretary of State, he will still make himself available to the House and usually be here, so that we can question him about what he is doing. I also congratulate the chief constable of the British Transport Police on his knighthood. The Government have said that they were looking at investment in the transport police. The Olympics are coming up, but we have not heard any more about that. Perhaps the Secretary of State could tell us more about how he sees the increase in support for the transport police.

Lord Adonis: My Lords, in answer to the noble Lord's first question, I know that the noble Lord, Lord Strathclyde, has suggested that those Peers who head departments might be subjected to dedicated Question Times in this House. I should be delighted to do so; I wish to be as accountable as the House wishes to make me. I know that I also speak on behalf of my noble friend the First Secretary of State, Lord President of the Council and Secretary of State for Business, Innovation and Skills, who is anxious to answer questions on all aspects of his responsibilities. As regards the Olympics, intensive consultations are taking place with the BTP and other police forces on how we will ensure that they are properly policed.

Lady Saltoun of Abernethy: My Lords, I was most relieved to hear the Answer of the noble Lord, Lord Adonis, to the first Question of the noble Lord, Lord Roberts of Llandudno. Is he aware that any Government who try to prevent us Scots from having a dram in the train or in the aeroplane on the way to or from Scotland are likely to have a rebellion on their hands?

Lord Adonis: I am indeed aware of that, my Lords.

Lord Bradshaw: My Lords, last week a new franchise was let for South Central trains and we were very pleased to see that it included provision for the manning of stations. However, what is the person manning a station to do in the event of drunken or rowdy behaviour? Is he isolated by himself? Will he have access to surveillance devices? Will he have contact with the British Transport Police?

Lord Adonis: My Lords, I very much expect that the additional staffing of stations will reduce crime. It goes hand in hand with another important aspect of the South Central franchise, to which the noble Lord referred: all trains and all stations on the South Central franchise will be equipped with CCTV, which has a big impact in reducing crime levels. At present, 50 per cent of stations and more than 3,000 trains are equipped with CCTV. This will mark a further advance and a benchmark to which I hope all franchises can be brought up in due course.

Lord Stoddart of Swindon: My Lords, the Question refers to public transport. Is the noble Lord prepared to discuss with the airlines their practice of serving free alcohol on aircraft, which is both dangerous and bad for the health of travelling passengers?

Lord Adonis: No, my Lords.

Arrangement of Business
	 — 
	Announcement

Lord Bassam of Brighton: My Lords, with the leave of the House, my noble friend Lady Royall of Blaisdon will repeat the Statement on Iraq at a convenient point after 3.30 pm.

Co-operative and Community Benefit Societies and Credit Unions Bill
	 — 
	First Reading

The Bill was brought from the Commons, read a first time and ordered to be printed.

Political Parties and Elections Bill

Main Bill Page
	Copy of the Bill
	Explanatory Notes
	Amendments

Report (1st Day)

Schedule 1 : Investigatory powers of Commission: Schedule to be inserted into the 2000 Act
	Amendment 1
	 Moved by Lord Marlesford
	1: Schedule 1, page 39, line 24, at end insert "provided that prior approval to enter any premises and to inspect documents found on those premises has been obtained from a magistrate"

Lord Marlesford: My Lords, I feel that I should apologise to the House for intruding on a Bill in which I have not taken part, although I have followed the proceedings on it. My point is wide and could affect all government departments in due course. Perhaps the only slight reflection I have is that—with the greatest respect to the noble Lord, Lord Bach, who I think will answer my amendment—it varies so widely that I almost wish that the First Secretary of State, Lord Pooh-Bah himself, were here to answer this brief debate.
	My amendment is concerned with an important constitutional point, which is on the powers of entry to premises. Many will be fully aware of the Bill that my noble friend Lord Selsdon, who unfortunately is not able to be here today, introduced in your Lordships' House in 2007 as a Private Member's Bill that received its Third Reading on 17 July 2008. It was indicated to us that No. 10 itself—the citadel of everything, of course—was sympathetic to that Bill. The intention of the Bill was to reduce the number of provisions in legislation that included powers of entry. At least, when one says "to reduce the number of provisions", it is not so much about the reduction of them; it is to reduce the number of occasions on which people are able to enter premises without any sort of consent from the person or occupier concerned and without any sort of outside authority.
	We all recognise that, in the very complicated life which we all lead, with Governments inevitably involved in and having to legislate for rules and regulations covering many different aspects of our lives, it is necessary for the Executive and their agencies to be able to check and enforce the legislation. What I do not think is so axiomatic is that there should be powers of entry to premises without consent or, if consent is not forthcoming, without at the very least the same sort of consent that the police have always had to have, which is a warrant. My amendment is to Schedule 1, where it says on page 39 of the Bill:
	"A person authorised by the Commission may, for the purposes of the carrying out by the Commission of their functions—
	(a) at any reasonable time enter premises occupied by an organisation to which, or an individual to whom, this paragraph applies",
	I propose merely to add the very necessary words—they would of course only apply where agreement has not been reached—
	"provided that prior approval to enter any premises and to inspect documents found on those premises has been obtained from a magistrate".
	It is a very simple amendment. I am doing it on this Bill because it was very disappointing that the Government, having indicated that they had sympathy with the desirability of reducing the occasions on which officials have powers of entry without warrant, did not take the opportunity in this Bill of circumscribing the powers of entry in this case, in this schedule, in the manner that I am advocating.
	Unless we actually make a start on at least not extending the number of powers of entry without warrant, we will never get anywhere. I hope that the time will come when the thousands of powers of entry that exist, scattered through the legislation on the statute book, will gradually be reduced. I recognise that it is a peripheral matter to this Bill, but I hope very much that the Government recognise that it would at least show an indication that the concept of unlimited powers of entry without consent was no longer acceptable in this country. We have been talking much recently about the alienation of the people from Parliament and from Governments. If political parties of whatever side were to explain to people that they sought greatly to reduce the number of occasions on which powers of entry could be used without a warrant, it is the sort of thing that they would very much find strikes a chord. Therefore, my amendment, which in no sense damages the purpose of the basic provisions of the Bill, is modest. I hope very much—but not with enormous optimism—that the Minister may find it in his heart, if not in his brief, to give some warmth in his reply to my amendment. If, by chance, some drafting improvement could be made, then I would be perfectly happy for the Government to give an undertaking to come back at Third Reading.
	In the mean time, however, I press the Government firmly to take account in the Bill of the need to take this step, in the direction that I have described. I beg to move.

Lord Bates: My Lords, I support the amendment moved so ably by my noble friend. His intrusion, as he put it, into the debate is welcome. It highlights an issue which has in many ways been dealt with in some detail by the Government, in the way that they have responded to issues arising from how the Bill was originally presented in the other place. When it was, the powers proposed were certainly far more draconian than those being considered now. In the intervening period, we had the disgraceful situation concerning my honourable friend Damian Green in the other place, with the access that was granted to his offices without his consent and the searches that were conducted.
	This is not in any way to suggest that the important work of the Electoral Commission—or, indeed, of the police, in the case of Damian Green—should be impeded, but simply that due process should be followed and that consent should be obtained. If consent cannot be obtained for some good reason, or there is a suspicion that, by giving notice, a further misdemeanour or crime may occur, it is open under my noble friend's amendment for the Electoral Commission to approach a magistrate and secure a warrant for that purpose.
	While what we recognised in Schedule 1 was brought back after that incident, when it was taken on Report and at Third Reading in the other place there was a significant reduction in the powers of entry in that clause. That was welcomed and we appreciated the steps that the Government had taken to listen to our concerns at that point over Damian Green.
	The amendment just offers a further tightening of the wording in a way that does not diminish in the slightest the powers of the commission to undertake its tasks. Therefore, we on these Benches are pleased to support my noble friend in his amendment. Obviously, we await the Minister's response with interest.

Lord Neill of Bladen: My Lords, I, too, support the amendment. There seems no good reason why we do not have the normal formula, such as "by order of" or "with the authority of" a court.
	A further point is that the interrelationship between these powers of entry in paragraph 2 does not really tie in with paragraphs 3 and 4. I can see nothing in paragraph 2 about the commission having "reasonable grounds to suspect" something or other. In certain circumstances it can come to a conclusion and serve a notice that it suspects something such as the withholding of documents. If you look on at paragraph 4, you find on page 40 that, when the commission has served such a notice, the High Court can make an order if it is satisfied that,
	"there are reasonable grounds to suspect that a person ... has contravened ... any restriction or other requirement imposed by or by virtue of this Act".
	One of those requirements would obviously be one following from a paragraph 3 decision.
	What troubles me is that this appears to be, in paragraph 2, a free-standing power of entry that is not linked with any conclusion by the commission that there are reasonable grounds to suspect that somebody is withholding something or has committed some other offence at all. This needs to be rethought, in my submission, and made harmonious with what one would normally expect. The noble Lord, Lord Marlesford, has moved an amendment with which I agree. The interrelationship between these clauses needs to be looked at.

Lord Cobbold: My Lords, I think it is one of the principal duties of this House to look after the interests of the individual, and this amendment goes a little bit in that direction. Therefore I very much support it.

Lord Ramsbotham: My Lords, I too would like to add my strong support to this amendment. In my naivety I did not realise that the normal conditions of applying for warrants did not apply in this case. It is rather sad in a way that things should have to be tightened but, if tightened they must be, this amendment is extremely sensible.

Lord Waddington: My Lords, I have difficulty in understanding why it is necessary to confer this power.

Lord Bach: My Lords, I am very grateful to the noble Lord, Lord Marlesford, for introducing this short debate on an important point. There may be some misunderstanding about it, but I understand the context in which the noble Lord is raising this issue. What he seeks to do in his Amendment 1 is to amend paragraph 2(2) of the new Schedule 19B to the Political Parties, Elections and Referendums Act 2000, which sets out the commission's powers of entry and inspection in relation to regulated organisations only. They are listed in paragraph 2(1). They are:
	"(a) a registered party or in the case of a registered party with accounting units—
	(i) the central organisation of the party;
	(ii) an accounting unit of the party;
	2(1)(b) a recognised third party (within the meaning of Part 6);
	(c) a permitted participant (within the meaning of Part 7)
	(d) is a members' association (within the meaning of Schedule 7)".
	They are the only people who are subject to this power.
	This is a supervisory power which allows the commission to enter premises at reasonable times to inspect documents relating to the income and expenditure of regulated organisations to which the power applies. The important point is that this is not a power for use in connection with investigations, or suspicions of wrongdoing. Rather, it is for use where the commission needs access to the financial and related documents, documentation of political parties and other related entities in connection with its regulatory role. That is why there is no relationship between this power in paragraph 2(b) and paragraphs 3 and 4 that the noble Lord, Lord Neill, stressed.

Lord Neill of Bladen: My Lords, will the Minister deal with this point? All the documents that he has referred to would be documents which they had an obligation to produce voluntarily, and they failed to do it.

Lord Bach: My Lords, that is probably true, but this is solely to do with the regulatory role as opposed to the investigatory role. This power actually replicates the commission's existing power. This is not something new. This was a power of entry in the Political Parties, Elections and Referendums Act 2000. Although I have not had a chance to research the matter completely, my understanding is that there was no opposition to this power when it was passed through Parliament in 2000. The only difference is that now it will apply to members' associations as well.
	In practice, the power generally underpins the commission's ability to visit parties co-operatively, to verify claims for policy development grants and conduct risk-based assessments. The effect of the amendment would be to place a requirement on the Electoral Commission to obtain prior approval from a magistrate before it can enter the premises of a supervised individual or organisation to inspect documents relating to their income and expenditure.
	I appreciate the intention behind the amendment, which is to help us to ensure that powers of entry are used appropriately. We fully support the view that the powers of entry in the Bill should be proportionate and justified, and feature appropriate safeguards to prevent their misuse. That is why the Government took steps in another place to restrict the application of this power to regulated organisations and not to individuals, and to prevent the use of this power of entry in connection with an investigation into a suspected breach or contravention of the 2000 Act. As I understand it, in so far as any investigation or suspected breach is concerned, even getting a warrant would not be sufficient to allow entry after the changes the Government made in another place.
	These steps are in addition to retaining the safeguards which the power has featured since the 2000 Act. For example, the power must be exercised at reasonable times and is confined to financial documents. Additionally, authorisation of a person acting on behalf of the commission to enter premises must be in writing and must be produced by that person if required to do so by the owner or occupier of the premises.
	We therefore think that the power of entry already features sufficient safeguards to prevent its misuse. A step such as that proposed in this amendment would, we think, place an unnecessary obstacle in the use of this power. As such, it risks undermining the Electoral Commission's effectiveness. Now more than ever, it is vital that Parliament empowers the regulator so that he or she is fully equipped to regulate the political system effectively. We therefore share the commission's view that the amendment would result in additional bureaucracy without any additional benefit. An application to a magistrate may lead to a negative and false inference being drawn; a court granting such a warrant may be seen to imply that the commission suspects breaches of the rules. That is not the case: the commission's use of this power is not concerned with the investigation of, or any suggestion as to the commission of, an offence.
	Furthermore, it is not clear what factors a magistrate would be taking into account when deciding whether to give approval. Given that the power allows the commission to enter premises at reasonable times for the purposes of carrying out its supervisory functions, it is difficult to envisage a situation where approval could reasonably be withheld.
	The further steps we have already taken to prevent the use of this power of entry in connection with an investigation into a suspected offence ought to reassure the House that the power will be used appropriately. In addition, the Electoral Commission says in its briefing:
	"Government amendments agreed during the passage of the Bill provide appropriate safeguards on this power ... The proposed involvement of a magistrate may create the misperception that a party has breached the law, where clearly it has not".
	The commission also undertakes to give organisations whose premises it intends to visit advance notice of the time and date of the proposed visit.
	This power of entry is not new—as I say, it has existed since 2000. The Electoral Commission has undertaken to use it only when necessary and to give parties prior warning. I repeat that the power cannot be used for investigations; instead, it allows the Electoral Commission to access information on those it regulates for its supervisory functions.

Lord Pearson of Rannoch: My Lords, I hope that the noble Lord realises that saying that something is already there and therefore it must be all right really is not acceptable in this area. Secondly, if the situation is as the noble Lord says, why does not the commission simply have the power to invite the organisation concerned to visit it, bringing along the relevant documentation?

Lord Bach: My Lords, of course I do not say that because this has been law since 2000, that is a complete answer to the amendment of the noble Lord, Lord Marlesford. However, it seems to have worked fairly well since 2000; no one seemed to object the last time this matter was before Parliament. I am not sure what has changed since then to make a difference. Secondly, of course the commission—

Lord Bates: My Lords, the Minister asked what has changed since then. The answer is the incident with Damian Green. We never considered that those powers would be exercised in the way that they were. They were exercised in that particular way and, as a result, the House is now extremely vigilant before giving them to anyone else.

Lord Bach: My Lords, I do not blame the noble Lord for using that example, but it is a completely irrelevant answer to my rhetorical question. The Damian Green incident had nothing whatever to do with a power that already exists in law and has done since 2000. It has absolutely nothing to do with the power that remains in the schedule, which has existed since 2000. To answer the second point made by the noble Lord, Lord Pearson, of course it is hoped and intended that normally these regulated organisations—which are, as I have set out, the parties—will go to the commission if and when requested. This is just a back-up power in case that does not happen. It has nothing to do with investigations or times when there is a suspicion of wrongdoing.

Lord Marland: My Lords, at the risk of testing the Minister's patience, I agree with his point about Damian Green but it is absolutely fundamental that the Electoral Commission has failed to police the donor system since 2000. It has failed to carry out its authority. Therefore, the amendment categorically puts in train a system that prevents the failure of the Electoral Commission. We must encourage this. There has been a litany of failure by the Electoral Commission. I would not want to be the executive of a party that was visited by the officers of the Electoral Commission on its whim, and without the authority of a magistrate.

Lord Bach: My Lords, hard as he tried, the noble Lord could not try my patience. I take the point, but I do not think that this is an example of the failure of the Electoral Commission. The power remains. It has been there since 2000. It is useful as a back stop. I quite understand why the noble Lord, Lord Marlesford, has chosen this as a way of getting across his important and general point about entry into premises, but I submit that it does not apply here. I invite the noble Lord to withdraw his amendment.

Baroness Butler-Sloss: My Lords, since 2000, has the Electoral Commission entered premises and investigated without the consent of the regulatory body, or has it always obtained consent?

Lord Bach: My Lords, it has not happened. It is a back-up power. It has either been successful or not, depending on how the noble and learned Baroness looks at it. It has not been necessary to use it.

Baroness Butler-Sloss: My Lords, it was a neutral question.

Lord Bach: My Lords, of course.

Lord Hodgson of Astley Abbotts: My Lords, in the Minister's explanation of why the Government wish to reject the amendment, he placed great stress on the fact that this power was for inspection, not investigation. We must understand that, in these circumstances, fishing expeditions may surely follow. You go out to inspect and, lo and behold, you end up with an investigation. It is naïve for us to think that there is a clear dividing line between inspection and investigation. The noble Lord, Lord Marlesford, is really concerned about investigation, but investigation may follow inspection as surely as night follows day. In many cases, the Electoral Commission may wish to use this power of inspection without the let and hindrance that the noble Lord, Lord Marlesford, proposes to impose upon it, to find ways of triggering and beginning investigations. The Minister is not being fair to the House in suggesting that there is a clear line between the two.

Lord Bach: My Lords, I think that for once the noble Lord is wrong. I specifically asked outside the Chamber what the position would be if in the course of a normal supervisory, regulatory visit to a political party, suspicion of wrongdoing was found. I understand from the answer that was given to me that at that moment, the Electoral Commission would have to leave the premises and go through the process to which the noble Lord, Lord Neill, related, in paragraphs 3 and 4. That is the law. As soon as the Electoral Commission becomes suspicious that a wrongdoing has occurred, it has to work under different rules altogether.

Lord Tunnicliffe: My Lords, perhaps your Lordships will note that the House is on Report, and that page 122 of the Companion states:
	"Only the mover of an amendment or the Lord in charge of the Bill speaks after the Minister on Report except for short questions of elucidation".

Lord Lyell of Markyate: My Lords, I have one question. The noble Lord, Lord Bach, has been saying repeatedly that this will not be used for investigatory situations but the Bill is unclear because it all comes under proposed new Schedule 19B, entitled "Investigatory Powers of Commission" at page 38. I support what my noble friend asked a moment ago. How on earth will one tell what the commission thinks it is doing?

Lord Bach: My Lords, it is all in Schedule 1. This item comes under the sub-heading "Powers of entry and inspection"; which comes after "Power to requiredisclosure" and before "Powers in relation to suspected offences or contraventions". This passage occurs before that. I have tried to do my best to tell the House how this will work and how it would have worked since the year 2000.

Lord Marlesford: My Lords, I am grateful to the Minister for his attempt to explain why my amendment is unnecessary and, in the Government's view, undesirable.
	He said that there may be a misunderstanding but there is no intention on my part, and no consequence from this amendment, to interfere with the proper functions of the inspectorate and those who are checking, as they are required to do, the implementation of the legislation. That is the first, basic point. I accept that in the great majority of cases—99 point whatever per cent—there will be no need for magistrates' warrants because these matters will be dealt with by a perfectly civilised communication and request for inspection and consideration. Most police actions are perfectly straightforwardly done by consent, discussion and agreement. The noble Lord said that the provision did not refer to individuals but it specifically says:
	"This paragraph applies to the following organisations and individuals".
	When the police have to intrude compulsorily on an individual they have to get a warrant and the magistrate takes into account the reasonable cause that the police put forward for the warrant. Exactly the same would apply here. The implication that magistrates would be incapable of making a decision is one that I would, I am afraid, reject.
	I am very disappointed in the noble Lord's response. The argument about it being there since 2000 is never a good one. We are moving forward and there is increasing dismay at the extent, much of it inevitable, of the supervising, the checking and, in some sense, the intrusion on organisations and individuals. The time has come that this should be limited, as far as possible, to consent, and where consent is not given then the warrant of a magistrate is a good and democratic way to discourage unnecessary intrusion. I am afraid that I am not happy with what the Minister has said, and I should like to test the opinion of the House.

Division on Amendment 1
	Contents 152; Not-Contents 105.
	Amendment 1 agreed.

Iraq
	 — 
	Statement

Baroness Royall of Blaisdon: My Lords, with the leave of the House, I will repeat a Statement made in another place by my right honourable friend the Prime Minister. The Statement is as follows.
	"Mr Speaker, the whole House will want to join me in expressing our condolences to the family and friends of the two soldiers who recently lost their lives serving in Afghanistan—Lieutenant Paul Mervis of 2nd Battalion the Rifles and Private Robert McLaren of 3rd Battalion the Royal Regiment of Scotland, the Black Watch.
	Our troops first went into Iraq in March 2003 and now they are coming home, so it is fitting that I should come to the House to talk of their achievements through difficult times, to chart the new relationship that we are building with Iraq and to set out our plans for an inquiry into the conflict. As always, we can be supremely proud of the way in which our forces carried out their mission—of their valour in the heat of combat, recognised in the many citations, rewards and decorations, and of their vigilance and resolution amid the most difficult imaginable conditions and the ever present risk of attack by an unseen enemy. Today, we continue to mourn and remember the 179 men and women who gave their lives in the service of our country.
	In my Statement to the House last December, I set out the remaining tasks in southern Iraq for our mission: first, to entrench improvements and security by putting Iraqis in charge of their own defence and policing; secondly, to support Iraq's emerging democracy through the provincial elections; and, thirdly, to promote reconstruction, economic growth and basic services such as power and water, to give the Iraqi people what matters most for their livelihoods in years to come and a stake in their economic future. I can report that these objectives have been achieved and that, thanks to our efforts and those of our allies over six difficult years, a young democracy has replaced a vicious 30-year dictatorship.
	In recent months, we have completed the training of the 9,000 troops in the 14th division of the Iraqi army, which is now fully in charge of security in Basra. It was the 14th division that, with our help and the help of the Americans, took on the militia in the crucial Charge of the Knights operation in spring last year. Since then, violence and crime in the Basra region have continued to fall, while levels of violence across Iraq as a whole are at their lowest since 2003.
	Provincial elections were held peacefully on 31 January with 7 million Iraqis turning out to vote for 440 different political groups. The Iraqis ran the elections themselves with only three violent incidents across the entire country. Preparations are now under way for national elections on 30 January 2010.
	Since 2003, the UK has spent over £500 million in Iraq, including providing humanitarian assistance and infrastructure and promoting economic growth. Support for the health sector has included $14 million spent on 189 projects in Basra, including the refurbishment of Basra general hospital and the building of the Basra children's hospital. As a whole, the international community has rehabilitated over 5,000 schools, as well as constructing entirely new schools and new classrooms in existing schools. Despite high unemployment and the scale of the global recession, economic growth in Iraq this year is predicted to be nearly 7 per cent.
	Significant challenges remain, including that of finding a fair and sustainable solution to the sharing of Iraq's oil revenues, but Iraq's future is now in its own hands—in the hands of its people and its politicians. We must pay tribute to the endurance of the Iraqi people and pledge to them our continuing support, but it will be support very different from the kind that we have provided for the last six years.
	As the House knows, our military mission ended with the last combat patrol in Basra on 30 April. As of today, there are fewer than 500 British troops in Iraq, with more returning home each week. On the day of that last combat patrol, I welcomed Prime Minister Maliki and most of his Cabinet to London, where we signed together a declaration of friendship, partnership and co-operation, defining a new relationship between our two countries for the future. At the request of the Iraqi Government, a small number of British Navy personnel, no more than 100, will remain in Iraq for the long-term training of the Iraqi navy at Umm Qasr. Royal Navy ships will continue to protect the oil platforms on which Iraq's exports depend and we will continue to offer training to the Iraqi army as part of a wider NATO mission. We will also offer training opportunities at Sandhurst and elsewhere in the UK for Iraqi officers of high potential.
	At the core of our new relationship will be the diplomatic, trading and cultural links that we are building with the Iraqi people, supporting British and other foreign investors who want to play a role in the reconstruction of southern Iraq. I have discussed with Prime Minister Maliki a plan for British companies to provide expertise to the Iraqi Oil Ministry. Earlier this year, the Mesopotamia Petroleum Company signed a joint venture worth $400 million. Shell is working with the Southern Oil Company to bring to market some of the 7 million cubic feet of gas currently lost each day by flaring. British firms are now competing for further contracts totalling $15 billion, and Rolls-Royce and Parsons Brinckerhoff are currently discussing with the Iraqi Ministry of Electricity proposals for a new power generation infrastructure in Iraq, worth an initial $200 million.
	British funding will support lending to 1,000 businesses in southern Iraq, and a youth employment programme, which should give training and work placements to 500 young Basrawis, could be rolled out across the whole of Iraq. We are supporting the Iraqi Transport Ministry in the resumption of civilian flights. Also, DfID and the British Council are working on a major education programme; Iraq has already identified its first 250 students—an early initiative in Britain's contribution to Iraq's plans for 10,000 overseas scholarships for Iraqi students.
	Issues in the region still confront us. Iran is an independent nation that deserves our respect, and the Iranian people are a proud people who deserve democracy. That is why the regime must address the serious questions that have been asked about the conduct of the elections. The way in which the regime responds to legitimate protests will have implications for Iran's relationship with the rest of the world. The House will also note the speech of Prime Minister Netanyahu, where, for the first time, he endorsed the two-state solution. His speech was an important step forward, but there remains a long road ahead of us. I will speak to him later today to press on him the importance of freezing settlements.
	With the last British combat troops about to return home from Iraq, now is the right time to ensure that we have a proper process in place to learn the lessons of the complex and often controversial events of the last six years. I am today announcing the establishment of an independent privy counsellor committee of inquiry. It will consider the period from summer 2001, before military operations began in March 2003, and our subsequent involvement in Iraq until the end of July this year. The inquiry is essential; by learning lessons, we will strengthen the health of our democracy, our diplomacy and our military. The inquiry will, I stress, be fully independent of government.
	The scope of the inquiry is unprecedented, covering an eight-year period that includes the run-up to the conflict and the full period of conflict and reconstruction. The committee of inquiry will have access to the fullest range of information, including secret information. In other words, its investigation can range across all papers, all documents and all material, so the inquiry can ask for any British document to come before it and any British citizen to appear. No British document and no British witness will be beyond the scope of this inquiry. I have asked the members of the inquiry that the final report of the inquiry will be able to disclose all but the most sensitive information—that is, all information except that which is essential to our national security.
	The inquiry will receive the full co-operation of the Government, with access to all government papers and the ability to call any witnesses, with the objective to learn the lessons from the events surrounding the conflict. It is on this basis that I have accepted the Cabinet Secretary's advice that the Franks inquiry is the best precedent. Taking into account national security considerations, as the Franks inquiry did—for example, what might damage or reduce our military capability in the future—evidence will be heard in private. In this way, evidence given by serving and former Ministers, military officers and officials will, I believe, be as full and as candid as possible.
	The committee will publish its findings in as full a form as possible. These findings will then be debated in the House of Commons and the House of Lords. It is in these debates, as well as from the report itself, that we can draw fully on the lessons learnt in Iraq. So while the format is the same as the Franks inquiry, we have gone much further in the scope of the inquiry. No inquiry has looked at such a long period. No inquiry has the powers to look in so much breadth. While Franks looked only at the run-up to the Falklands conflict, the Iraq inquiry will look at the run-up to the conflict, the conflict itself and the reconstruction, so that we can learn lessons in each and every area. The inquiry will take into account evidence submitted to previous inquiries.
	I am asking members of the committee to explain the scope, width and breadth of the work to opposition leaders and the chairs of the relevant parliamentary committees. In order that the committee should be as objective and as non-partisan as possible, the membership of the committee will consist entirely of non-partisan public figures acknowledged to be expert and leaders in their fields. There will be no representatives of political parties from any side of this House.
	I can announce today that the committee of inquiry will be chaired by Sir John Chilcot and will include the noble Baroness, Lady Prashar, Sir Roderick Lyne, Sir Lawrence Freedman and Sir Martin Gilbert. All are or will become privy counsellors. The committee will start work as soon as possible after the end of July and, given the complexity of the issues that it will address, I am advised that it will take one year. As I have made clear, the primary objective of the committee will be to identify lessons learnt. The committee will not set out to apportion blame or consider issues of civil or criminal liability.
	Finally, I am sure that the whole House will join me in paying tribute to the courage and dedication of every one of our Armed Forces and our civilian personnel who have served our country with such distinction in Iraq over six years and who continue to do so in Afghanistan and on peacekeeping missions around the world. At its peak, a force of 46,000 served tours of duty in support of operations in Iraq. In total, 120,000 served over the period of the entire conflict; 179 Britons died and 222 were seriously or very seriously injured.
	I said in my Statement in December that the memorial wall in Basra would be brought home. I can now confirm that it will form part of a new memorial wall to be built at the National Memorial Arboretum in Staffordshire. Just as it is right that we should pay tribute to the memory of those who have fallen and the wounded, so it is right that we should celebrate the safe return of their comrades and their shared achievements. I can also tell the House that in the autumn of this year a service of thanksgiving and commemoration will be held in Westminster Abbey.
	We salute our forces today. Through their work, the work of their American and coalition comrades and that of the Iraqi security forces, supported by the courage and vision of those within Iraq led by Prime Minister Maliki, Iraq is emerging from the shadow of 30 years of brutal dictatorship and then conflict. Today, Prime Minister Maliki and his Government can work together for a peaceful and prosperous future. That they can do so now is the ultimate tribute to all who served in Iraq—to their skills, commitment and sheer professionalism, to their great and enduring courage in conflict and to their immeasurable contribution to reconstruction and to peace".
	I commend this Statement to the House.

Lord Strathclyde: My Lords, I thank the noble Baroness for repeating the Statement. I, at the outset, join her in sending condolences to the families of the men who have so recently lost their lives in service to our nation. Of course, the Statement is welcome in many ways. Under four years ago, a British woman was arrested in the heart of London for reading out names of those who had died. Now at last we have some admission that the truth cannot be indefinitely covered up. The ranks of the dead and injured of all nations, including Iraqis, have the right to demand that. The war provoked the largest public demonstration seen in London in modern times. Many people were deceived—I put no finer point on it—into thinking that the Saddam Hussein regime presented a direct threat to regional security and, specifically, to this country's security with weapons of mass destruction.
	Thanks to the report of the noble Lord, Lord Butler of Brockwell, we now know that the intelligence was not as extensive, detailed and authoritative as Mr Blair told Parliament that it was. Why did he do that? I very much hope that the inquiry will tell us. If not, it will have failed.
	The noble Lord's skilful inquiry into the use—some might say abuse—of intelligence was one of several into limited aspects of the events surrounding the war, but we have never had a comprehensive review into how this massive foreign policy disaster occurred. What were our war aims? Was regime change, now frequently cited as an alleged benefit of the war, a covert objective from the outset? When and in what detail was this discussed with the US Administration and other coalition allies? Why did we have no proper post-conflict plan? Will all these sorts of questions be covered in the inquiry? Should the terms of reference not be the widest possible, to enable the inquiry to go wherever it needs and to see whatever document it requires to get at the truth?
	The report by the noble Lord, Lord Butler, did not address the diplomatic exchanges preceding the war and the international commitments that our Government may or may not have given at that time. It did not focus on the legal case for war or the structure or motivation of the political decision-making that led to it. It threw a troubling sidelight on sofa government and its consequences and on the involvement of the No. 10 spin team in these events, but these have never been fully probed. As for the infamous "dodgy dossier", two former Cabinet Ministers, the late Robin Cook and Clare Short, have asserted that the public were misled, while Mr Straw called the dossier, "a complete Horlicks". These are shameful admissions of serious government incompetence and need to be examined with the greatest care.
	It would not be to criticise the report of the noble and learned Lord, Lord Hutton, into the death of Dr David Kelly—one man who told the truth—to say that the spin machine's role needs rigorous re-examination. Can the Minister assure us that senior politicians—the Franks committee included two senior former Cabinet Ministers from the Opposition—will be involved in the inquiry, people familiar with the nature of political decisions? If she cannot give those assurances, will she tell us why not?
	On the legal background, the advice of the Attorney-General and the mysterious political meetings and conversations noted in paragraphs 366 to 387 of the report of the noble Lord, Lord Butler, surely deserve further scrutiny. The availability and use of diplomatic reports and policy advice by experienced officials need to be examined.
	In 1982, following the invasion of the Falklands, there was a prompt inquiry by Lord Franks and six privy counsellors into the way in which the Government had carried out their responsibilities in the run-up to the war. The inquiry reported in six months. It made recommendations and commented on blame. Why is this inquiry not reporting on a similar timescale and with similar powers? Is it because the Prime Minister intends to drag out this Parliament for another year and has decided in advance that no one was to blame? In the Franks inquiry, the Prime Minister—the noble Baroness, Lady Thatcher—three other Prime Ministers, many Cabinet Ministers, civil servants, intelligence officers, MPs and journalists all gave evidence. Will this inquiry have legal powers to subpoena witnesses and submit them to detailed examination?
	I acknowledge that the Franks committee met in secret, but that was over 25 years ago. Some participants have published memoirs, some have signed lucrative contracts to publish memoirs and others have spoken freely to journalists and authors. In this age of so-called democratic renewal, should the presumption not be that, except where national security is involved, the inquiry should be in public?
	It would be churlish not to welcome this inquiry simply because it is overdue. Its terms of reference need further work and the Statement leaves questions still to answer. My noble friend Lord Fowler has tabled an important Motion for debate on Iraq on Thursday and I very much hope that the Minister who replies to that debate may be able to shed even more light on this process than can be done in the short time available today.

Lord Wallace of Saltaire: My Lords, we on these Benches join in offering our condolences regarding those recently killed in Afghanistan and in remembering the important sacrifices made by the 400 people killed or seriously wounded in the course of the intervention in Iraq. We remember also the enormous cost of invasion and occupation; the impact on our Armed Forces; the opportunity costs for domestic spending that the costs of Iraq over the past several years have involved; and the extent to which British support for the Bush Administration was crucial in the American decision to go ahead with the invasion.
	We have here a major failure of British foreign policy that aroused immense disquiet among the British electorate as a whole. I and my family were among those who marched before the invasion took place. I recall getting off the train at Waterloo with my wife, and the first two people we recognised on our way to the march were a consultant from Guy's and St Thomas's, and a City banker we had known for years—not your average marchers. It was a very widespread, popular movement of disquiet among middle class and working class, old and young. This inquiry must answer that disquiet. We are all conscious of the extent of popular distrust of the political elite. The inquiry must begin to rebuild popular confidence in what the Government and political elite are doing. There are constitutional implications, as we talk about constitutional renewal, in the nature and structure of this inquiry.
	The crucial issue is the approach to war—the 12 months ahead of the invasion in March 2003. The lessons of post-war reconstruction, by comparison, are secondary. There are many byways that one could go down in such an inquiry. One could look at the extent to which the United States consulted Her Majesty's Government in responding to the Iranian initiative of the spring of 2003, which was a major missed opportunity in the immediate post-war period. One could look at the whole balance of Middle East policy over the past five years—but that would take an enormous amount of time. The crucial questions are: why did we go to war, were we misled, and what options were available to the Government?
	The Franks report is not a comfortable model. I remember it well. I was a researcher at Chatham House at the time and reviewed it at length for International Affairs. It was a very successful distraction, written in Civil Service language, which enabled the Government to spin the line that basic mistakes were made by the intelligence services and the embassy in Buenos Aires, thus distracting attention from the extent to which the crucial failures were within the Government—I refer to the recognition by the noble Lord, Lord Carrington, and others in the Foreign Office, that you could not get the Prime Minister to agree to negotiations with Argentina when she had finally accepted that she had to negotiate on Zimbabwe, or Rhodesia as it then was. That was the political failure at the heart of why we drifted into the Falkland Islands conflict, together with the failure to co-ordinate the defence review in which John Nott cut the Navy, including the Falklands guard ship, giving a clear but unintended signal to the Argentines that we did not regard the islands as important. This is not a good model 25 years later—here I agree strongly with the noble Lord, Lord Strathclyde—when the age of deference has left us even further behind, and when people expect as far as possible to have public accounting.
	Much of the material is already in the public domain. More ought to be. Perhaps the Leader of the House will tell us whether Sir Jeremy Greenstock's memoirs—an important contribution to understanding what happened during that period—which have been blocked from publication, will now be published as a matter of urgency as part of the background to the inquiry. The members of the committee are a very respectable, creditable and expert group; but again, I regret that there was not fuller consultation about the composition of the committee. It would have increased public confidence if there were senior politicians from other parties on the committee, and it would have been appropriate, as we are talking about constitutional renewal, to have had clearer parliamentary involvement in the establishment and membership of the committee.
	Lastly, I echo what the noble Lord, Lord Strathclyde, said on timing. It is possible to take minutes and years. In this respect, what one wants is, clearly, a quick response. Is the committee intended to report before the next election or is it intended to kick the issue into the grass until after the next election? We on these Benches expect it to report well within the next 12 months. If we are told that it is going to take a great deal of time, we will be extremely unhappy.

Baroness Royall of Blaisdon: My Lords, we are addressing a very difficult and important issue today. At the outset, in answer to the noble Lord, Lord Strathclyde, I must say that we have not been covering up the truth. We have said that we would undertake an inquiry, or ensure that an inquiry was undertaken, as soon as appropriate—and we always felt that it would be appropriate when our troops left Iraq. Our troops are leaving Iraq in July, when the inquiry will begin its work.
	The inquiry will have a very wide remit. The noble Lord, Lord Strathclyde, mentioned previous inquiries. All evidence that was before previous inquiries will go before the committee. All issues relating to diplomatic exchanges and international commitments, as well as the failure of the UN, a subject that has not been addressed by past inquiries, will be before the committee and will be very widely probed. In relation to senior politicians, the committee will be able to call before it any senior politician, any civil servant and any member of the Armed Forces. That is why it is along the lines of the Franks inquiry and why it is meeting in private—so these people have the confidence to give sensitive information. However, the Prime Minister is consulting the Cabinet Secretary on whether some parts of the hearings can be held in public.
	I was asked whether the inquiry would identify and punish individuals who made mistakes. The object of the inquiry is to identify lessons learnt that we can apply in other conflict and post-conflict solutions. We are not looking to lay blame or expose individuals to legal challenge.
	The noble Lord, Lord Wallace, asked why no senior political figure was on the committee. The members of the committee that I named have great experience working closely with government, and I have every confidence that they will do an excellent job.
	Both noble Lords asked about the timing of the inquiry. We would all like to have the committee report back as soon as possible, but these are complex issues. Everybody in this House would agree that we want a thorough report. The advice from the Cabinet Secretary was that, with such a remit in terms of reference, a year would be appropriate. This is not kicking the matter into the long grass. The Franks committee dealt with a very short timescale, but it had a restricted remit looking specifically at events leading up to the Argentine invasion of the Falklands and could therefore report within six months. This committee is looking at precisely what the noble Lord said was so important—it is looking at the time leading up to the invasion, from mid-2001 until next month. That is an awfully long time for a committee to consider, and a year would seem appropriate.
	I was asked whether the inquiry would cover issues such as, "Why did we go to war?" Yes, it will cover all those issues. Will Jeremy Greenstock's memoirs be published? I do not know, but I shall certainly come back to the noble Lord in writing.
	With that, I think that I have covered all the questions that have been raised to date.

Lord Wright of Richmond: My Lords, in the run-up to the invasion I argued consistently against it both in this House and in evidence to the Foreign Affairs Committee of the other place. Will the Minister give an assurance that the inquiry will look into the genuine considerations that led to the invasion of Iraq? It is widely believed that the main argument for invading Iraq was the presence of weapons of mass destruction, which, as we all know, were later found not to be there. Will the inquiry examine the extent to which a wish or a desire to punish Iraq for its role in 9/11, which, as we now know, simply did not exist, led to that invasion? Secondly, will it examine the extent to which information was invented to show that the Iraqi regime had links with al-Qaeda, which led to the explanation of the reasons for invading Iraq? I believe that we were seriously misled in both respects. I should like the inquiry to look into that and into the extent to which we were told by the Americans what the real reasons were.

Baroness Royall of Blaisdon: My Lords, I recognise that the noble Lord has taken a consistent position on the Iraq war. I can assure him and the House that the remit of the committee of inquiry is such that it will take into consideration what the noble Lord calls the "genuine considerations" that led to the war. It will take evidence from the widest possible group of people and will consider all evidence that has been given to earlier inquiries. Therefore, I am confident that it will deliver what the noble Lord asks for.

Lord Foulkes of Cumnock: My Lords, my noble friend says that it will take evidence from the widest possible group of people. Will she give us an assurance that provision will be made to take evidence not only from the political elite in Iraq but also from representatives of the Marsh Arabs and the Kurds who no longer suffer under the vicious dictatorial regime of Saddam Hussein?

Baroness Royall of Blaisdon: My Lords, it will of course be up to the committee and the chairman of the committee to decide exactly from whom it wishes to take evidence. I have no doubt that it will wish to take the widest possible evidence and I cannot see why it would not wish to talk to Iraqis who suffered in such a way under Saddam Hussein.

Lord Fowler: My Lords, as my noble friend said, many of these questions can be taken up further in Thursday's debate. I have a specific question on the scope of the inquiry. One of the worst failures has been in dealing with the hundreds of thousands of refugees created by this conflict, some of whom were employed by this country. Will the inquiry cover British policy towards those refugees? Does the noble Baroness agree that there is no reason why such evidence should be taken in secret? It should be open and we should be able to see it.

Baroness Royall of Blaisdon: My Lords, refugees are such a pertinent issue that I have no reason to doubt that the committee would not wish to take evidence about them. I cannot bind the committee, but I imagine that it would wish to. Advice will be taken from the Cabinet Secretary as to whether that session would be in public. However, as the noble Lord said, it does not relate to security so perhaps it is an issue for a public inquiry.

Lord Maclennan of Rogart: My Lords, does the noble Baroness agree that by speaking as she did, in answer to a question, of the failure of the United Nations she indicated a partisan view, which was far from independent and, indeed, was prejudging what the inquiry may find? Further, does she also recognise that, by spreading this inquiry not only over the events that led up to the war but over the conduct of the war and later reinstatement of Iraq, she is projecting the inquiry way beyond the term of this Parliament? That will be seen widely as an attempt to evade government responsibility.

Baroness Royall of Blaisdon: My Lords, I am certainly not doing two things. I am not taking a partisan view; I am trying to take a rounded view. I was trying to mention one issue that I know has not been dealt with by former inquiries. That is why I mentioned the UN. All the other issues that noble Lords in this House care so deeply about will be considered by this committee.
	I am also certainly not trying to dilute the work of the committee so that all that noble Lords wish to see from this committee is not brought about. The noble Lord, Lord Fowler, asked just now whether or not I thought that refugees would be considered by the committee of inquiry. As I explained, it is up to the committee of inquiry. I would think that, if I were on the inquiry, it might well be covered. However, I am not seeking to dilute the work of the committee in order to ensure that the Government are not tainted in any way. I am trying to show noble Lords that the remit is as wide as most noble Lords would wish it to be.

Baroness Symons of Vernham Dean: My Lords, as the person who at the time was the Minister called upon most frequently in this House to defend the Government's position over the military action in Iraq, I welcome this inquiry. I welcome the opportunity to learn for myself some parts of what went on that maybe were not as clear as they might have been at the time.
	My noble friend might recall that, at the time of the run-up to the war, I was asked repeatedly in this House about the links to al-Qaeda and to terrorist organisations. At no time did I, as a Minister, say that there were any such links. Indeed, I went out of my way in this House to say that there was no evidence of any such links, even though some of your Lordships thought that the Americans had showed conclusive evidence.
	I ask my noble friend two questions. Will this inquiry cover the diplomatic exchanges in advance of the military action as they related to our allies, and also as they related to others in the region, such as Iraq's neighbours? I hope that that will be the case. Will the inquiry also cover the diplomatic exchanges after the invasion in the period when there was a build up to the greater internal violence in Iraq? I think the diplomatic exchanges at that time, between ourselves, the United States and other interested parties, are of the utmost importance as to what happened after the military action was taken and why things went the way they did.

Baroness Royall of Blaisdon: My Lords, I am grateful to my noble friend for reminding me that, throughout the period when she was standing at this Dispatch Box, she did not on any occasion allege any link between al-Qaeda and the invasion of Iraq. To my knowledge, I do not think the Prime Minister made any link either. I would reassure my noble friend that the committee will consider the diplomatic exchanges with our allies and Iraq's neighbours before, and also in the period following, the invasion.

Lord Hamilton of Epsom: My Lords, the Minister will recollect that her Government introduced a strategic defence review in 1998 that committed our Armed Forces to one medium-sized continuing conflict at a time. When we intervened in Iraq, that became two. Will the inquiry include the visits that the Chief of the Defence Staff made at the time to Prime Minister Blair to say that there should be a step increase in defence expenditure? Each time he was referred to the Chancellor of the Exchequer, Gordon Brown, which did not get him very far. The result has been irreparable damage to our Armed Forces.

Baroness Royall of Blaisdon: My Lords, I absolutely refute the allegation that our Armed Forces have been irreparably damaged by the war in Iraq. They have done a fantastic job, as I know that the noble Lord would recognise, but they have also been equipped and serviced as they should have been.
	I honestly do not know whether the committee of inquiry would want to look at issues such as the strategic defence review and subsequent discussions. I would not wish to make any undertaking on the committee's part, but I am sure that the noble Lord could ask its members themselves.

Baroness Nicholson of Winterbourne: My Lords, while I welcome her Statement, will the noble Baroness consider two further points? First, I particularly welcome the transfer of the wall of memory, which I had the honour to be at during last year's poppy celebrations, to the National Memorial Arboretum in the UK. Would the Government consider a special plaque in the British embassy in Baghdad to recognise the sacrifice of so many British soldiers?
	Secondly, during the investigation, will the Government ensure that the commission has full, unexpurgated access to the Arabic evidence that has already been given in many different trials in Baghdad, particularly the evidence in the "Chemical Ali" trial, in the north and in the south, and the upcoming trial on the genocide of the Marsh Arabs that should start next month? I would be grateful if the Government could reassure us to that effect, as British evidence is just a small fraction of the knowledge that is available.

Baroness Royall of Blaisdon: My Lords, I am grateful for the noble Baroness's welcome of the transfer of the wall of memory to the National Memorial Arboretum. A special plaque in our Baghdad embassy is an excellent idea. I cannot make that commitment, but I will certainly take it back to the department.
	On full and unexpurgated evidence, it would seem sensible that the committee of inquiry should have access to that. I will certainly make inquiries.

Lord Anderson of Swansea: My Lords, the scope of the inquiry seems unprecedented in its breadth, lasting over eight years and covering in detail legal, humanitarian, intelligence, military, reconstruction and diplomatic issues. Surely the Franks committee was not a happy precedent in this sense. There must surely be a danger that the inquiry will drag on for a very long time indeed, as noble Lords are now asking for even more aspects to be added to it.
	Can my noble friend give an assurance that a steer will be given to the chairman to be as rigid and firm as he can, and that members of the committee will be asked to ensure that their other commitments are put aside so that they can proceed as expeditiously as possible with this important inquiry? Presumably the committee will not start its proceedings for a month or two in any event.

Baroness Royall of Blaisdon: My Lords, the chairman of the committee has great experience, and I am sure that he will do everything he can to ensure that everybody's diaries are cleared and so on. I agree with my noble friend that we need the inquiry to be carried out as expeditiously as possible. The Prime Minister has asked that it report within a year. I am sure that everybody would wish to ensure that the report was received within a year.

Lord Ramsbotham: My Lords, one of the most important documents to emerge in recent years, as far as the military is concerned, did not come from this country. It was produced in America and is called Counterinsurgency Operations. It resulted from a direct and in-depth inquiry into what had happened in Iraq and Afghanistan, and how well the military was prepared for the sort of operations that both entailed. The interesting thing about the composition of that inquiry is that although it was militarily led, it included a large number of experts from right across the field.
	I am interested that the Minister says that the inquiry is meant to go into "lessons learnt". However, I find in what she said, unless I have misheard, that there is no military member of the inquiry, who might be able to lead such an inquiry into the in-depth lessons which are, after all, hugely important to the future development of our Armed Forces.

Baroness Royall of Blaisdon: My Lords, I certainly recognise the noble Lord's points. However, the majority of the committee members have great experience in dealing with defence issues and great contact with the MoD. I am sure that they may well be calling on some MoD experts for advice.

Lord Lyell of Markyate: My Lords—

Baroness Falkner of Margravine: My Lords—

Baroness Thornton: My Lords, there is time for both noble Lords to speak—perhaps the noble and learned Lord first?

Lord Lyell of Markyate: My Lords, will the noble Baroness the Leader of the House kindly assure the House that the legal issues will now be looked at really carefully by the inquiry? Does she recognise that there was no issue in relation to the Falklands War and its legality because it was so plainly covered by Article 51 of the UN charter? There are very serious questions here, and the time has now come for all the legal advice that was given to be most carefully examined and all the factual information which was given to the then Attorney-General and others in preparing their advice to be fully disclosed—at least to the inquiry and then, in so far as national security permits, to the House and the country.

Baroness Royall of Blaisdon: My Lords, some of these issues have been dealt with in previous inquiries—for example, the Butler inquiry. However, if the committee believes that this issue must be addressed, I am confident that this issue must be addressed, and it is certainly within the remit.

Baroness Falkner of Margravine: My Lords, does the noble Baroness accept that it stretches credulity a little to look at the scope and the timeframe of this inquiry and to imagine that there is not a political imperative here? If we accept in good faith that there are two aspects to this—the events leading up to the war and the conduct of the war itself—may I suggest a two-part inquiry, with part 1 reporting within months on the events leading up to the war and then a longer, more considered part 2 that can take witnesses from all over the world, and take its time but may report well afterwards, that will look at the conduct of the war itself?

Baroness Royall of Blaisdon: My Lords, Members of this House are saying, "We want the inquiry, we want it now, we want it to report tomorrow", and then everybody is telling me all the different things that they want to be in the inquiry. This committee is going to be faced with some very difficult challenges and some extraordinary time constraints. It is up to the committee how it structures its work. It may want to come back in two parts—I do not know; that is a matter for the committee. Many of the issues that the noble Baroness raises are inextricably linked so the committee may wish to see them in the round, as it were.

Lord Morgan: My Lords, I welcome, as many on these Benches will, that we are going to have this inquiry. I was also one of those who took part in the march against the war. I wrote against it in the press. I thought then and I think now that it is a deeply shameful episode which brought discredit on the Prime Minister of the day and also on the Conservative Party of the day, from David Cameron downwards, who supported it. I think the lack of trust in our politicians began from this episode.
	I thank my noble friend for her Statement. Can I ask two things? First, can I reinforce the point about looking about the legality? There was a statement about the criminality not being looked at. In the views of virtually ever professor of international law in the country, this was a deeply criminal act which had the same justification legally as Hitler had in 1939 when he invaded Poland. I hope Martin Gilbert will look at this, as a historian.
	Secondly, I hope that this inquiry will take very much a transatlantic context. It was not an episode of British policy alone. There is every reason to believe that decisions were taken, not in Whitehall, not in Westminster, but in Crawford in Texas. I hope that this inquiry can consider that broader remit.

Baroness Royall of Blaisdon: My Lords, I have high regard for my noble friend, but some of his comments were inflammatory, if I might put it like that. The remit is extremely wide and I am sure that it will look at what he called the transatlantic context. It is entirely within the committee's remit to look at the legal aspects should it so wish.

Lord Crickhowell: My Lords, can the Leader of the House clarify a point about the publication of evidence? This inquiry is likely to be held largely in secret, but its effects will be crucially influenced by the amount of evidence that is actually published. A report without evidence is much less valuable than one which is accompanied by the evidence that has produced the conclusions. Can the noble Baroness clarify the extent to which evidence will be made available?

Baroness Royall of Blaisdon: My Lords, what the committee will ultimately wish to publish is a matter for it to decide. If the material is secret or sensitive, publication would not be appropriate; however, I am sure that the committee will wish to publish the maximum amount.

Political Parties and Elections Bill

Main Bill Page
	Copy of the Bill
	Explanatory Notes
	Amendments

Report (1st Day) (Continued)

Amendment 2
	 Moved by Lord Tyler
	2: After Clause 3, insert the following new Clause—
	"Review: the procedures for local referenda on recall for misconduct
	The Secretary of State shall, within 6 months of this Act being passed, in exercise of his powers under section 6(2) of the Political Parties, Elections and Referendums Act 2000 (c. 41) (reviews of electoral and political matters), request the Electoral Commission to review and report on the procedures for local referenda on the recall by constituents of a Member of Parliament found guilty of misconduct."

Lord Tyler: My Lords, I want to make it clear that the new clause we are proposing fulfils the promises made by all three party leaders in recent days that the eventual decision about whether a Member of Parliament found to have behaved dishonestly should rest with constituents. The amendment is effectively a facilitating amendment; it would set in place a responsibility on the Secretary of State to call from the Electoral Commission, within six months of the passage of this Bill as an Act, a request to review and report on procedures for local referenda on the recall by constituents of a Member of Parliament found guilty of misconduct.
	As with so many things on the reform agenda, we are providing an opportunity this afternoon for all those who say that they favour change to put their votes where their rhetoric is. The amendment introduces the prospect of constituents being able to recall their Member of Parliament—ultimately, then, to give him or her the sack—if, and only if, they have been judged by an independent body to have made a serious transgression of the rules. People have been asking why MPs who have announced their quiet exit from Parliament should be allowed to wait and why, if they have been found out for charging the taxpayer for duck houses or dry rot, or have learnt how to flip their second home arrangements like pancakes to make extra cash, they should not be subject to recall now. Why should constituents wait until the Prime Minister calls a general election for an opportunity to choose a new Member of Parliament?

Lord Foulkes of Cumnock: My Lords, will the noble Lord give way?

Lord Tyler: I have only just started, my Lords, but of course I will.

Lord Foulkes of Cumnock: My Lords, I should like the noble Lord to clear up a fundamental point. The procedure he is outlining is possible at the moment, because each Member of Parliament represents a particular constituency and is elected by first past the post. The noble Lord and his party favour some sort of proportional system. Would it not be a thousand times more difficult, if not impossible, to have this kind of recall system in the electoral system that he favours?

Lord Tyler: My Lords, your Lordships' House is famous for the ability, often taken, to divert from the subject on the Bill in hand and go off on a tangent, but I refuse to be tempted by the noble Lord. I promise him a personal seminar in the different systems of proportional representation—of which he, of course, has been a beneficiary in Scotland—after we have dealt with the Bill.
	I want to make it clear that our amendment is not a charter for party Whips—I confess to having previously been the Chief Whip for my party—star chambers, scrutiny panels or kangaroo courts. I utterly reject, indeed, the selective approach of some party hierarchies to make sure that awkward colleagues are for the high jump at the election, while trusted lieutenants are quietly reinstated. This amendment is about providing due process in Parliament and then clear, transparent processes for the public to censure and dispense with their representatives when it has been proved by the relevant authorities that they have broken the rules.
	Members of your Lordships' House will recognise that we are somewhat inhibited at the moment by the lack of certainty over the proposed parliamentary standards authority. The PSA is still a gleam in the Prime Minister's eye and, perhaps, in the Minister's eye. However, my right honourable friend Nick Clegg has already backed the idea of independent monitoring and an investigative agency of this sort, and I understand that the Conservative leader seems equally well disposed to this. Of course, we cannot specify its precise role in this amendment because it does not yet exist, so we aim to show how responsibilities could be set if and when it comes into being. Incidentally, we do not yet know whether the PSA will have a specific role in these matters as far as this House is concerned. No doubt we will see that in due course when other legislation is brought forward.
	We can assume that the parliamentary commissioner for standards will be responsible to that authority and not to either or both Houses of Parliament. That, at least, is clear. It is surely a welcome development, which rightly separates the defendant from the judge and jury. Our whole political system, as well as the individual, is on trial at the moment. Only in those cases where the independent judgment has been made, by the proper authorities, that someone has done something so serious that they should be suspended from the House, would we envisage using this new right for the final—and perhaps the highest—court of public of opinion to have its say. I make it absolutely clear that if a Member is thought by his or her constituents to have done something politically wrong—such as voting the wrong way on Iraq—as opposed to breaking the rules, this system cannot be triggered. It is only triggered when the parliamentary standards authority has taken full account of the incident and the views of the Member concerned.

Lord Foulkes of Cumnock: My Lords, does the noble Lord not think that it would be difficult to define the difference between political and other offences? For example, if a party leader accepted £2.4 million from someone who was later convicted for giving that money illegally—the money belonged to someone else and the party leader failed to return it to the rightful owner—would that be the kind of offence that could trigger a recall?

Lord Tyler: My Lords, I do not think that the noble Lord has been following my argument. We will have, as we are told by the noble Lord's leader the Prime Minister, a parliamentary standards authority. It will be responsible for the investigative system that will be undertaken by the commissioner. Presumably that will be the present commissioner with a new remit. If that due process is completed properly, and is not in any way affected by party considerations, with a decision that a particular Member has so infringed the rules of the House that he or she should be suspended, it will be possible—on demand of, say, 5 or 10 per cent of voters signing a special petition—to call a by-election. That is what the Prime Minister and the Conservative leader have been talking about in the last few days. That is what I am talking about. With this amendment we seek to give effect to the intentions of all three party leaders. Today we should agree, in principle, that those steps should be taken to give effect to the promises that have been made on behalf of all three major parties.
	Much has been made in recent days about the special link between MPs and their constituents. As a former Member, I know that there can be a very strong sense of connection for constituents in that they talk about their local MP as "their" MP. Many MPs are, in that sense, servants of their constituents, who send them to this building. If they break the rules, surely the constituents, and not their parties, party leaders, kangaroo courts or the Chief Whip, should have the right to say, "You are not our MP any more. You have broken our trust and you must go". That is a sound principle for us to agree to. Today is Parliament's earliest opportunity to make that statement. If we dodge this issue now, I fear that the public will think that we have deliberately forgotten it already, despite the promises of recent days from all three party leaders. Delay will be interpreted as a further broken promise. Let us show this place, at least, in a good light this afternoon by deciding to change rather than just to debate change.
	Our amendment will not be the final word as it expressly confers that responsibility on the authorities—the Electoral Commission in the first place and in due course on the newly created PSA—to report the details and to set out options for Parliament to agree. For once, instead of just talking about the merits of an idea, let us vote this afternoon to make it happen. I beg to move.

Lord Borrie: My Lords, I do not know whether I misheard the noble Lord, Lord Tyler, but I think he said something to the effect that procedures for local referendums are not in place. His amendment is quite misconceived. It is putting the cart before the horse. He wants to put into the Bill before us today something to do with the powers of the Electoral Commission, which exists and has several new powers given to it by this Bill, but only on the basis that there are procedures for local referendums on the recall by constituents of an MP found guilty of misconduct. The detail of how that would be done, how the referendums would take place, or what is meant by misconduct, to which my noble friend Lord Foulkes, referred, is all left unexplained. That is hardly surprising because, as the noble Lord admits, there are no such referendums for recall at the moment. The amendment should be ruled out—not out of order, although it is practically out of order because it depends on things that do not currently exist.

Lord Campbell-Savours: My Lords, I have a reservation that the noble Lord might wish to consider. I sat on the Members' Interests Committee in the House of Commons from 1982 until 1994 and on the Privileges Committee in the House of Commons from 1996 until 2001, so I sat through a number of inquiries. The problem with inquiries is that they have to make a judgment and such judgments can be fine and on the margin. In the event that a finding was on the margin, members of the standards authority might have in mind the possibility that an elector might choose that judgment as a way of triggering a referendum, and that might distort the judgment of those Members who sit on the standards authority. While I recognise that electors often strongly want to remove people who breach the rules, the cases on the margin would worry me and to what extent the fact that they might trigger that referendum at a local level could influence the judgment of the standards authority. I suspect that on the margin judgments could be diluted because of the authority's concerns.

Lord Foulkes of Cumnock: My Lords, I support the remarks of my noble friend Lord Campbell-Savours. I can see exactly that sort of situation arising. We have seen in the media recently vendettas built up against certain politicians, which is easy when one sees a large number of newspapers and the BBC taking a particular line, which may not be based on fact. I was recently involved in a case in relation to the Speaker of the House of Commons. Most of the stuff printed in the newspapers was downright lies, yet a certain perception grew up about the person in this case. A perception can be created and acted on. This House could even be pushed into taking action against Members because of fear of the media, but that applies even more so in the House of Commons. A political campaign could be manufactured against a Member of Parliament and in the constituency there could be a movement to get rid of that Member on an entirely political basis.
	The noble Lord, Lord Tyler, ought to think carefully. I hope that he might speak a little more. For example, I am particularly disappointed that the seconder of his amendment, my good friend the noble Lord, Lord Rennard, is not here; he probably knows more about all aspects of this subject than anyone present. Could the noble Lord, Lord Tyler, tell us why the noble Lord, Lord Rennard, is not able to be with us to lend his vocal support to this amendment?
	My last point is the one that I made in my first intervention, which the noble Lord, Lord Tyler, batted away in an insouciant manner as if it was irrelevant, but it is very relevant. The reason why we have seen the petitions and campaigns growing up in constituencies about individual Members of Parliament is that MPs have been elected by the first past the post system and are accountable. Real democracy lies in that accountability of individual Members, which is there in first past the post but not in the arithmetical correlation between the number of votes cast and the number of Members of Parliament in some fancy scheme devised by the Liberal Democrats or others.
	The noble Lord, Lord Tyler, referred to my own election to the Scottish Parliament. That was through a system that is entirely wrong—I am its beneficiary, but I do not like the system. In a list system, how would this work? I hope that the noble Lord, Lord Tyler, might explain this. Let us suppose that a list system was introduced at the behest of the Liberal Democrats, particularly one like that for the elections that we have just had for the European Parliament. How could that system work then? The noble Lord's proposal is very naive. Since a former leader of the Liberal Democrats is present with us, he might also consider a situation where a Mr Michael Brown gave a huge amount of money to a particular party which turned out not to be his but to be given illegally. If that party did not return the money, would that come under this particular category? The noble Lord is opening a can of worms with this amendment and perhaps he would think carefully before pressing it.

Lord Hodgson of Astley Abbotts: My Lords, I follow the noble Lord, Lord Borrie, in thinking that much of this amendment seems previous in its make-up. The amendment talks of being "guilty of misconduct", but we do not quite know by whom, about whom or how that procedure will work. It is important to have that issue clear in any Bill before we move further down that road.
	My concern follows those expressed by other noble Lords. We obviously want Members of Parliament who will exercise their independent judgment. Indeed, we are talking about greatly strengthening the power of individual Members of Parliament in the face of the Executive, which will mean that they are highly controversial. Under the "guilty of misconduct" rule, one is concerned that the awkward squad might suddenly find themselves somehow being asked about aspects of their behaviour that they might not be asked about if they were more prepared to toe the line of whichever party they belonged to. Even worse, a Member of Parliament with a particular behaviour—it might be particular sexual preferences that are entirely within the law—might run into groups in their constituency who greatly disapprove of it, as is their entitlement, and in turn might seek to disaffect and build up opinion against that Member.
	The power of Members of Parliament needs buttressing in many ways. They have lived a life where they have been squeezed and squeezed and, while misconduct clearly has to be punished, we have not yet reached the right or appropriate place to strike the balance, either in the Bill or this amendment.

Lord Bates: My Lords, I must admit that I feel some professional sympathy for the noble Lord, Lord Tyler. His amendment seems to be struggling for any support at all, having been demolished pretty effectively by the comments of the noble Lords, Lord Borrie, Lord Foulkes and Lord Campbell-Savours. If there were any stumps still left in the ground, my noble friend Lord Hodgson has ensured that they have been taken out.
	However, the noble Lord, Lord Tyler, has done the House a service by raising this matter. I do not think that anybody who has been out on the campaign trail knocking on doors over the past six weeks can be in any doubt about the anger felt by members of the public at the breach of trust that has been revealed through the articles, mostly in the Daily Telegraph, on expenses. There is intense anger. We need to ensure that there are degrees of protection for Members of Parliament.
	Those who are in favour of representative democracy and the notion of Members of Parliament ought to be encouraged that people feel so strongly and expect such standards from the people who represent them in the House of Commons and, for that matter, in the House of Lords. The fact that people feel so strongly is welcome. One way of recognising it is to be able to recall a Member of Parliament in extreme circumstances. The noble Lord, Lord Tyler, was right to say that in a wide-ranging speech my right honourable friend David Cameron referred to this as one of the possibilities, along with a range of other things, including fixed-term Parliaments, that are needed to restore trust in the parliamentary process and the trust of constituents in their Members of Parliament. That process has a long way to go. We are at the beginning—I am looking at the Minister. Is he about to come in? No. He is just listening intently; how generous.
	In moving his amendment, the noble Lord said that it is not entirely in order or watertight in its present form because it does not specify the role of the public standards agency. I could not see the reference to the public standards agency—

Lord Tyler: My Lords, it does not exist.

Lord Bates: My Lords, we already have a problem, and I am sure that the noble Lord, as a student of matters procedural, will recognise that that makes it difficult to proceed.
	Perhaps this is an opportunity to have a discussion about the other issue, which relates to the circumstances under which censure would take place. Although the amendment does not mention it, it has been stated in the press and by the noble Lord, Lord Tyler, in his introductory remarks that this would be an option where a motion of censure had been passed on a Member of the House of Commons. That would trigger a mechanism by which a petition, a referendum or a by-election would take place. We are unsure about which at the moment. There already is a mechanism: a Member of the House of Commons whose case has been highlighted and who has not yet been censured has chosen to apply for the Chiltern Hundreds, thereby causing a by-election in Norwich North and giving people a say on this.
	The noble Lord is on to something and does us a service by tapping into a huge level of anger and concern at the revelations that have been made. He may have a point about the mechanism of recall, although we would like to see a recall of Parliament en bloc and a general election called as a way of testing the public mood on these matters. But the recall of individual Members of Parliament could be considered. There would need to be safeguards against the malicious prosecution mentioned by my noble friend Lord Hodgson. The experience in the United States has not exactly been wonderful. In California, 5 per cent of the electorate—a pretty large number—voted to recall Gray Davis to allow Governor Schwarzenegger eventually to be elected.
	There remains a series of questions about the mechanism and how this would take place. If this is simply a probing amendment, I think that it does the House a service. If it is a serious amendment, I cannot see how we could possibly support it, unless there were further evidence as to how it would work.

Lord Bach: My Lords, I thank the noble Lord for raising this topic. The amendment would compel the Secretary of State to request the Electoral Commission to undertake a review and report on arrangements that would enable constituents to recall a sitting Member of Parliament. As has been said, a number of recall systems are in operation internationally, most notably, as the noble Lord, Lord Bates, just reminded us, in 18 states in the United States of America. Detailed characteristics vary but they commonly involve a certain number of electors petitioning for the holding of a ballot at which an elected official may be voted out of office mid-term and/or for a by-election for their replacement.
	I agree with noble Lords that there is no doubt that the issues that have arisen in recent weeks have badly dented—if not worse—the public's confidence in politicians of all parties and in the institutions of our democracy. As my right honourable friend the Prime Minister made clear last week, there is no more pressing task for all of us involved in public life than to respond to the public's demand for reform. In his Statement on constitutional reform on 10 June, the Prime Minister set out the Government's intention to bring forward new legislative proposals following cross-party discussions as the first stage of this reform. These proposals include, as the noble Lord, Lord Tyler reminded us when he moved this amendment, the immediate creation of a new parliamentary standards authority and the agreement of a statutory code of conduct for all Members of Parliament. The Prime Minister said:
	"There will be consultation with all sides of the House to come forward with new proposals for dealing effectively with inappropriate behaviour, including the potential options of effective exclusion and recall for gross financial misconduct, identified by the new independent regulator and by the House itself".—[Official Report, Commons, 10/6/09; col. 796.]
	Provision for the recall of elected officials exists in 18 of the 50 US states, although not at federal level. The American experience has been varied. It is certainly true to say that the recall of elected officials has not been common. Until 2003, when the Californian governor was successfully recalled following a recall election, despite other attempts, the only governor to be successfully recalled was in 1921 in North Dakota. There are examples at a more local level of government in the United States of successful recall.
	The variation in the systems in operation across the 18 states is instructive when considering whether similar arrangements might be appropriate for the United Kingdom. For example, as the noble Lord, Lord Bates, pointed out, the question arises of what constitute the grounds for recall. Specific grounds are required in only eight states and most commonly relate to gross misconduct, violation of oath or criminal convictions. All 18 US states have some form of petition process, but the thresholds vary. Usually the formula is based on a percentage of the vote in the last election for the office in question, but there are other variants. There are also variations in the way in which the ballots are conducted, including the point at which the individual who is subject to the recall is permitted to put forward their own case.
	No doubt all these questions merit careful consideration; indeed, the amendment envisages putting these considerations into the hands of the Electoral Commission. However, to task the Electoral Commission with policy work of this nature is inconsistent with the recommendation of the 11th report of the Committee on Standards in Public Life, which recommended that,
	"the Electoral Commission should no longer have a role in undertaking policy development in relation to electoral legislation. This function should be the responsibility of the appropriate Secretary of State".
	I think that the commission agrees. Its briefing document for the Report stage of the Bill notes, in relation to the amendment:
	"The Commission would of course review and report on the administration of any procedure to recall Members of Parliament, were we directed to do so. In doing so, we would focus on the extent to which any such procedure was run consistently, professionally and with a primary focus on voters, in the same way as we approach our reports on other elections".
	The commission clearly envisages that its role will be limited to the consideration of how any ballot that was conducted as part of a procedure ran, as in other elections.
	I am sure that there is agreement on all sides that this suggestion merits careful consideration and, indeed, the Prime Minister has made clear his commitment to taking this debate forward. I therefore hope that noble Lords will agree that legislating to force a debate on this issue will not be necessary and that, in any event, the Electoral Commission is not best placed to undertake this work. Again on behalf of the House, I thank the noble Lord, Lord Tyler, for raising this very current issue and I hope that he will consider withdrawing his amendment today.

Lord Tyler: My Lords, I am grateful to all Members of your Lordships' House who have contributed to this thoughtful, if brief, debate. I hope that it will be listened to with care at the other end of the building.
	In response to some of the points that have been raised, I should say that there are quite well established rules in statute for the handling of referendums. That meets the point made by the noble Lord, Lord Borrie. I accept the point made by the noble Lord, Lord Campbell-Savours, that it could affect the judgment of the new parliamentary standards authority if it knew that, at the end of this careful process, the result could be a by-election, but we will have to be confident that this new machinery will stand above the party battles and will be truly independent and approach these issues with due integrity, or there is no point in having it; we might as well keep the present rules. That is the critical issue that other Members may not have appreciated. This is part of a new regime that we know will come. The Prime Minister has said that it will come; indeed, he has raised the issue of recall in this context, and the other parties have agreed.
	For that reason, the noble Lord, Lord Foulkes, is not right that there could be a vendetta—I think that that was the word that he used—because the process will be outwith party discussions and away from all policy issues. It will have nothing to do with partisanship. Incidentally, the noble Lord kindly expressed interest in where my noble friend Lord Rennard was. I am afraid that he is ill today. He will be here on Wednesday for another day of Report, but I promise to tell him of the considerable concern that was expressed by the noble Lord.
	The noble Lord, Lord Hodgson, is absolutely right that clearly we will have to develop a very good process—a due process—that will have to be a long way away from the present processes, which rely on Chief Whips and special groups in parties. Even small groups of people at constituency level decide the fate of a Member of Parliament. That is utterly wrong. We should have a due process and proper triggers, so the noble Lord is right.
	If this amendment is passed, the process that I am suggesting will be looked at carefully by Electoral Commission. I do not think that it would endanger the independence of Members of Parliament who may take a view that their constituents think of as controversial. In this process, the controversial views will not be in question; the question will be whether, on the clear evidence put before an independent investigation, the Member has broken the rules of their House. Therefore, the recall mechanism, with which the noble Lord, Lord Bates, expressed some tentative agreement, must be something that both Houses of Parliament should look at carefully.
	In the past few weeks, politicians have constantly said to the public, "Yes, we understand your anger. Yes, we understand you want to have a bigger role in deciding what should happen". If, now, at this first opportunity, the parties say, "Oh well, of course, we don't want you to have any role at all; we want to leave it to the parties and those people within Parliament or in the local party structure to make all these decisions", there will be real disappointment. The Prime Minister—the Minister just now repeated it—said:
	"There is no more pressing task".—[Official Report, Commons, 10/6/09; col. 795.]
	Your Lordships' House has an opportunity to take up that challenge from the Prime Minister and we should take it.
	It is true that we do not have the whole system in place, but very soon we will have a new system in place. Your Lordships' House would be right to put a marker down that we think that, ultimately, the public anger to which the noble Lord, Lord Bates, referred is very important. The Prime Minister, the leader of the Conservative Party and the leader of my party picked that up and see that it is essential to find a mechanism to which that public anger can be constructively deployed.
	Look at the contrast between the sort of procedure that I am discussing and the present knee-jerk reactions. Within a few days, a few people in a constituency can give a thumbs-down to an individual constituency Member. That is surely wrong. This measure would be much better. I believe that we should recognise that the public feel that their influence—their power—over their representatives, especially in those 500-plus safe seats in the House of Commons, has diminished and is diminishing and that this should be reversed. I wish therefore to test the opinion of the House.

Division on Amendment 2
	Contents 49; Not-Contents 148.
	Amendment 2 disagreed.

Schedule 2 : Civil sanctions: Schedule to be inserted into the 2000 Act
	Amendment 3
	 Moved by Lord Bates
	3: Schedule 2, page 46, line 10, leave out "a prescribed" and insert "an"

Lord Bates: My Lords, the amendment is in the name also of my noble friend Lord Henley. The amendments in this group follow on from a discussion that we had in Grand Committee, at cols. GC 93-96 of the Official Report, on 29 April. We sought there to elicit from the Minister some examples of offences which might give rise to criminal sanctions. The Minister said in response, at col. GC 96, that he would "write to me"—to use that famous term—with some examples. I waited with bated breath, thinking of nothing of else during the entire month of May and waiting only for this letter from the Minister to arrive. And duly it did, at 11 o'clock last night. It ran to some seven pages, and I am afraid thatI have not been as assiduous as I should have been and have not managed to digest all of it. However, I have a few questions.
	I invite the Minister to, in his usual thorough way, walk us through the letter that he sent and highlight what he intended by this measure. Our concerns arose from the Committee on Standards in Public Life report of January 2007, which stated on page 35 that, currently,
	"the only sanctions that the Electoral Commission has if parties do not comply with legislation is to name and shame or, if the offence is sufficiently serious, to refer it to the Crown Prosecution Service for criminal prosecution".
	In its fifth report, the committee made it clear that the Electoral Commission should not have any substantial judicial power. The Government accepted this recommendation and the committee continues to believe that this is the right approach. We, too, believe that. What we sought in tabling these probing amendments in Grand Committee was to have on the record some further examples of the types of offences that might be engaged. I shall carefully listen to, and read, the Minister's response. I beg to move.

Lord Bach: My Lords, I start with an apology. I said that I would write to the Committee, giving examples of where we felt that it might be preferable to leave offences to be dealt with by criminal law rather than by the new civil sanctions. Regrettably, this letter did not go out until last week. It was e-mailed to the noble Lord's office, the Whips' Office, on Friday. It did not go out before then because of the significant pressures involved in readying government amendments. I am sorry that a copy did not arrive in the noble Lord's hands until last night. I am glad to have the opportunity—I am grateful to him—to outline our approach in the House. I am sorry that the noble Lord has not been able to read my long letter to him. If he had managed to get to the second page, there are a couple of examples of where we think that a criminal sanction is appropriate. Now that I am on my feet, let me say a little more.
	I will move straight to the examples mentioned by the noble Lord. The new range of civil sanctions should be applicable to the vast majority of offences contained in the 2000 Act. They represent a proportionate and flexible approach to enforcement and should remedy the current situation whereby the enforcement choices range from criminal investigation at one end of the spectrum to, effectively, nothing at the other. This point was made with force in Committee by the noble Lord, Lord Rennard, who is unfortunately absent—we wish him well. We know that there is a strong consensus that the current situation is not satisfactory.
	Some offences are more serious than a mere administrative error, and it would be more appropriate to reserve these breaches for the criminal sphere only. For instance, where there is a deliberate attempt to undermine the 2000 Act on a significant scale, it could be that allowing only for the possibility of a criminal sanction is the appropriate approach, in keeping with the gravity of the offence. This would also send a clear deterrent signal about the most serious offences in the earlier PPERA Act. Nothing in the Bill should detract from our overriding objective that compliance with the law is vital in the context of public confidence in our democratic systems.
	I shall give a couple of examples of where reserving certain offences for the criminal sphere might be more appropriate. Section 61(2)(a) of PPERA makes it an offence knowingly to give the treasurer of a party false information about donations. This is an example of where the basis of the offence is a deliberate and wilful attempt to mislead over the facts of a donation, as opposed to an administrative oversight or error. Also under Section 61(2)(a), it is an offence to withhold from a treasurer information about donations with intent to deceive. Additionally, we believe that where an individual or organisation deliberately attempts to conceal evidence or intentionally hinder an investigation by the commission, this behaviour may require the strong deterrent of criminal prosecution. For example, Section 148(1) of PPERA relates to the altering, suppressing, concealing or destroying of documents relating to the financial affairs of supervised organisations or individuals, and Section 148(2)(b) makes it an offence knowingly to supply false information when purporting to comply with a request to provide information.
	In such cases where an administrative error in itself is not the offence but rather the wilful or malicious attempt to destroy or otherwise conceal evidence, it may be more appropriate that the deterrent and the enforcement are criminal. I stress that these are examples: this is not a full list of the offences that may remain only in the criminal sphere. We will bring that forward when we make the statutory instrument under this clause.
	Noble Lords may wish to note that it was originally the recommendation of the Committee on Standards in Public Life that, apart from providing for new sanctions for use by the commission, the most severe offences should remain purely in the criminal sphere. If these amendments, which I am grateful to the noble Lord for describing as "probing", were passed, they would prevent us from providing for this option, or at least debating the pros and cons of this or other approaches as part of the debate on the statutory instrument. I hope that I have explained in rather more detail than I was able to give in Committee what kind of offences we think should remain only in the criminal sphere.

Lord Bates: My Lords, I am grateful to the Minister for his response to the amendments and for the additional information that he has now placed on the record. It was felt that there should be in the Bill an indication of the types of offences that could be involved but I accept the reasons that he puts forward for why that should not be the case and also the provision of a statutory instrument that will contain more detail on the specific offences.
	Our concern was that for the most serious offences there should remain the criminal option. In a previous debate, we discussed the potential moral hazard that could occur if the Committee on Standards in Public Life assessed a Member and knew that the consequence of its judgment could mean that proceedings for recall were commenced. In certain circumstances, following the argument of the noble Lord, Lord Campbell-Savours, that might give rise to some hesitation on the part of the committee before it arrived at that conclusion, even if it was the right one. There is a similar concern here that, with the civil sanctions that are available, the Electoral Commission may feel under some restraint as to how they will be deployed and at what point it would choose to pass over the case to the Crown Prosecution Service for pursuit of criminal sanctions. Now that those matters have been aired, and the information secured, I do not want to press the amendment and beg leave to withdraw it.
	Amendment 3 withdrawn.
	Amendments 4 to 15 not moved.
	Amendment 16
	 Moved by Lord Henley
	16: Schedule 2, page 51, line 12, leave out "early payment discounts or"

Lord Henley: My Lords, I speak also to Amendment 21. These two amendments deal with Schedule 2 and, in particular, the part relating to the fixed penalty notices under the civil rather than the criminal sanctions. If the Minister remembers, in Committee I moved probing amendments, seeking to remove both the early payment discounts to the fixed penalty notice and the late payment penalties. I received a response in due course from the Minister. On this occasion, I have come back with two amendments to remove the early payment discounts but leave in the late payment penalties. It seemed to us that one could put a case for late payment penalties but that, although early payment discounts might encourage early payment, they could also diminish the authority of the commission and trivialise a very important message sent out by its power to give those fixed penalty notices. For that reason, I thought that it would be worth coming back with these two amendments removing the early payment discounts to see whether the Minister had anything further to say on the subject. I beg to move.

Lord Tyler: My Lords, in Grand Committee my noble friend Lord Rennard expressed some anxiety about this proposition. We are very anxious about the greater bureaucracy likely to be entailed, on which I think Members on all sides of the House will concur, which will be imposed on local treasurers and others who have a reporting or other responsibilities. In that connection, we think that it is better simply to stick with penalties for late submission of information rather than indulge in what we think will be quite complex arrangements, which may have to be constantly reviewed, for some assistance for early payment discounts. We still stand by that—and probably with the Minister, I suspect. Simplicity would suggest that a late penalty is better than an early discount.

Lord Bach: My Lords, the amendments both relate to early payment discounts for financial penalties imposed by the Electoral Commission. Amendment 16 would delete the reference to early payment discounts from paragraph 7(3)(b)(iii) of new Schedule 19C to the 2000 Act, which relates to the availability of early payment discounts or late payment penalties in a notice of a discretionary requirement imposed by the commission. Amendment 21 would remove paragraph 18(1)(a) of new Schedule 19C, which allows the Secretary of State to make a supplementary order to allow the commission to offer provision for early payment discounts for any of the monetary penalties contained in the Bill.
	Noble Lords present during Grand Committee may recall that we touched upon the provision of early payment discounts and of late payment penalties during our debate. An amendment on late payment penalties that was tabled and debated at Committee has not returned here. Following the endorsement that late payment penalties have received, I think we can safely suggest that a general consensus exists that this provision will be a useful tool for enforcement. That is certainly the expressed view of the Electoral Commission. However, the provision of early payment discounts has received less unanimous support.
	For those noble Lords not present at Committee, I reiterate that the provision of an early payment discount is replicated from the Regulatory Enforcement and Sanctions Act 2008, on which the civil sanctions regime is based. As I have said on a number of occasions, we are not minded to depart from that regime and treat the commission differently from other regulators unless there is the strongest possible reason for doing so. That is a view following that of the honourable Mr Howarth in another place. We need to provide an incentive for swift compliance in cases when liability is not going to be disputed, offering the opportunity for a person to deal with it in a timely fashion. The provision would therefore also reduce the workload that late payment would create for the commission and generally encourage compliance, helping to keep costs of enforcement down and bolstering the regulatory regime.
	The key point that needs to be made here is that, while the Bill provides for the possibility of these early payment discounts, it in no way requires them to be used. It simply allows that the statutory instrument, which will need to be passed in order to provide more detail about the sanctions procedure, may make provision about discounts. There is no obligation for it to do so. If a decision is made to allow for discounts in the statutory instrument, that instrument will be laid before Parliament and may be debated. If the statutory instrument allows for discounts, it will be a matter for the commission to decide when, if indeed at all, it will be appropriate for it to use this provision. Following its consultation on the draft enforcement guidance, it will be able to make a decision about whether to use them.
	Officials from the commission have indicated to us that, at present, they would be unlikely to use the early payment discount as part of the enforcement regime during its initial phase. However, we do not think that is a reason for leaving this provision out of the Bill altogether. If we were to remove that now and the commission later decided, in light of its practical experience of operating the sanctions, or of feedback from those subject to it, that early payment discounts added to the fairness or effectiveness of the regime, it would not be able to use them without further primary legislation. That makes the position inflexible. It makes sense to keep the option open and allow the commission the scope for using the same powers that are available to other regulators under the RES Act. I believe, therefore, that it would be more sensible to leave this provision in place. After all, the commission's approach may need to adapt to the reality of operating the new civil sanctions, and we may not be able to say with confidence at this juncture that this provision will never be of any use.
	I will say that if we are persuaded by strong arguments on this, we could take another look at making a change and removing the provision for early payment discounts. But our present attitude is not to do so.

Lord Henley: My Lords, I was amused by the Minister's final remarks. It was almost as if his speaking note, written out in Civil Service-ese, had "If pressed" written there. However, I shall not be pressing the Minister on this occasion. I was very grateful to hear the Minister say that he thought that some consensus had come into being, particularly on the question of the late payment penalties, where ourselves, the Liberals and the Government seemed to be in agreement. That is the first occasion this afternoon on which we have had the use of the word "consensus". I know that the noble Lord, Lord Campbell-Savours, is not quite as keen on consensus as are ourselves and the Government. We will continue to pursue consensus as and when possible.
	I think that the noble Lord, Lord Tyler, misunderstood me. I was making it clear that I was moving only the amendment relating to early payment discounts, which is why I dropped the late payment penalty amendment that I moved in Committee. I think that we have had the assurance from the Government that all the Bill does is give power to the commission to bring in either late payment penalties or early payment discounts or both, that they will not be introduced without some form of secondary legislation and that secondary legislation will be affirmative. I certainly had a nod from the Minister on that first one. I take it that I can have his assurance that on the second point the regulations will be affirmative, but I shall keep talking while winged Mercury does his bit to get the information back to the Minister. With that assurance, I am more than happy to withdraw the amendment.
	Amendments 17 to 22 not moved.
	Clause 6 : Number of Electoral Commissioners
	Amendment 23
	 Moved by Lord Brooke of Sutton Mandeville
	23: Clause 6, page 5, line 4, leave out "or ten"

Lord Brooke of Sutton Mandeville: My Lords, Amendment 23 requires a brief word of explanation. I raised the issue of the statutory numbers of commissioners during the Clause 6 stand part debate in Grand Committee. The Minister said that the matter could and would be covered in a letter. As is indicated by an asterisk on today's Marshalled List, I did not table my amendment until late last week when no letter had arrived. I think that I may have been subject to the same conditions as my noble friend Lord Bates.
	In putting down the amendment, I had no discourteous or aggressive intent; I just wanted to ensure that there was a peg on which to raise the issue on Report. Indeed, my respect for the courtesy of Ministers had suggested to me a possible circumstantial reason for the Government's silence, in that Hansard put the Government's assurance into the mouth of the noble Lord, Lord Tunnicliffe, whereas my mind's eye and ear told me that the noble Lord, Lord Bach, had uttered it. Therefore, it is possible that the matter fell inadvertently between two stools.
	I am grateful for the letter from the noble Lord, Lord Bach, which greeted my return today. It explains the rationale of the Bill's text in a way that the Explanatory Notes, despite their title, do not in this instance. I shall of course understand if the noble Lord, Lord Bach, wishes to put on the record what is in his letter, but I can give him an assurance now that his letter has wholly satisfied me. I beg to move.

Lord Hodgson of Astley Abbotts: My Lords, my Amendment 24 in the group is concerned with political restrictions on staff in Clause 7. Restrictions are imposed on people who have held certain posts as to the time that must elapse before they are able to become members of the staff of the commission. In this case, I wish to increase the basic period of quarantine in proposed new paragraph 11A(2)(c) from one year to three years.
	I raised the matter in Committee and we had an interesting debate on it. The reply from the Government, in the shape of the noble Lord, Lord Tunnicliffe, was:
	"I have nothing to add at this point".—[Official Report, 30/4/09; col. GC 132.]
	I hope that the Minister will forgive me if I found that a slightly less than obliging response. Therefore, I am returning to the matter and I hope that he will give me a slightly better and more fulsome response this afternoon, failing which I may feel inclined to test the opinion of the House.
	Since we discussed the matter on 30 April, events have reinforced my view that the 12-month period presently contained in the Bill is too short. It is a truism that confidence in our democratic institutions has taken a battering in recent years and, in the past few weeks, Parliament has moved to the eye of the storm. This afternoon we do not need to go into why, how and where, but it is a fact. Many of us believe that the Electoral Commission in its new guise will play a critical role in rebuilding public confidence. If it were to fail, which we all hope that it will not, the damage will be extremely serious and severe—doubly so, because expectations will have been aroused in the general public only to be dashed. Therefore, I think that we need a belt-and-braces approach to ensure that not only is it above reproach but is seen to be so.
	In Grand Committee, I took a certain amount of incoming fire. The noble Baroness, Lady Gould—I am sad not to see her in her place; she was here a minute ago —said that what was then government Amendment 77, which I think is now new paragraph 11B, answered my concerns. It gives the chief executive of the commission the flexibility to require, following a discussion with the Speaker's Committee, other potential members of staff of the Electoral Commission to undergo a greater quarantine period. I entirely agree with the noble Baroness about the need for flexibility. I think that that is an excellent idea and I have no problem at all with new paragraph 11B.
	The danger is not about posts that are permanently sensitive but about those that are temporarily sensitive. Junior members of the staff of the commission will carry out investigations, putting together documents, searching through files and doing various work, which may or may not lead to a prosecution. It does not seem likely that the chief executive will wish to go to the Speaker's Committee to obtain clearance to ensure that people who do that have not been involved in politics in the immediate past. Therefore, I think that, while the noble Baroness's point is entirely fair, it provides only half the answer.
	The second lot of incoming fire came from the noble Lord, Lord Tyler, who may feel after my slightly disobliging remarks on his Amendment 2 this afternoon that he wishes to return to the matter. The thrust of his argument was that it was one of "mindset"—the word that he used—not time bars. I agree with him that mindset is important, but the problem can be guarded against by lengthening the time bar. If you have a time bar of a week, a mindset would not be easily overridden. With 12 months, you have a little more coverage and, with 36 months, someone has to have a critical and long-lasting attempt to disconcert the Electoral Commission. That deals with the mindset argument.
	Who would be affected by the amendment? It would be a very small number of people who had shown an above average level of political commitment and interest. They would be an officer or employee of a registered party or any accounting unit of such a party, a donor in the register of donations or a participant in the register of recordable transactions under Part 4A.
	I urge the Government to think again about this. To have a situation where an officer or an employee of a registered party can become a member of the staff of the Electoral Commission within 12 months seems to me to be extraordinarily dangerous. It is better to be safe than sorry. We should have a longer period for people who have held these quite senior and sensitive roles before they are able to switch—if I may use the vernacular—from poacher to gamekeeper.

Lord Tyler: My Lords, I repeat the point that I made in Committee, to which the noble Lord, Lord Hodgson, has referred. It is extremely important that we should not imagine that the threshold of the number of years will be absolutely the deciding factor; the deciding factor will be the mindset. In support of the argument that the noble Lord has given, I accept that 12 months is not very long. In recent weeks, we have had interesting examples of people in very sensitive positions who were still political activists. The classic case was of a member of the private office of the Home Secretary who then gave information to an opposition spokesperson, Mr Damian Green. The person concerned was very much still an activist. I do not know how long he had been inactive—I suspect not very long. He had previously stood as a Conservative candidate. We have had the more recent example of a member of staff, somewhere in this building presumably, who has felt it necessary to leak substantial information about the circumstances in which Members of the other House—and, for all I know, Members of this House—made claims for allowances. Therefore, this area is very sensitive.
	The noble Lord, Lord Hodgson, has done us a great assistance in bringing this back to the House so that at least the Minister can examine this issue. What worries me more than the particular case that he refers to—12 months versus 36 months—is the division between new paragraph 11A and new paragraph 11B. I remind the House that, under new paragraph 11B, a number of less important posts can be subject to the discretion of the chief executive of the commission. Might the Minister, in responding to this brief debate, look again at where the dividing line between the paragraph 11A categories and the paragraph 11B categories comes? That is important, as perhaps it is in that area that we need to be more clear about what considerations will be taken into account, what can be left to the discretion of the chief executive and what needs to be on the face of the Bill and eventually in statute.

Lord Henley: My Lords, my Amendment 25, which is grouped with Amendment 24, relates purely to the new paragraph 11B case, as referred to by the noble Lord, Lord Tyler. In Grand Committee, I asked the Minister to give some examples of when he thought the chief executive might wish to make use of the power in new paragraph 11B. I said that I had some ideas of my own but that I would be grateful for the Government to give their views as to when they thought it likely that the chief executive might exercise those powers.
	We had no response from the Minister that I can find or that I can remember at the time. It might be that the examples are in the famous letter that my noble friend Lord Bates received last night, which I got only when I arrived here. That is my own fault for not arriving until 1 pm, but I have not been able to go through that letter in enough detail to see whether the Government can give such examples. I hope that the Minister, when he comes to respond, will deal with that question and give some examples of when the chief executive might make use of those powers to vary times under paragraph 11B, which I have suggested through our amendment should be deleted, although that is merely by way of probing.

Lord Tunnicliffe: My Lords, I thank noble Lords for these amendments. I believe that what I am about to say will cover the individual inquiries of each of the noble Lords. Amendment 23 would amend Clause 6, which sets out the number of electoral commissioners. Currently, the Political Parties, Elections and Referendums Act 2000 provides that there should be,
	"not less than five, but not more than nine Electoral Commissioners".
	Clause 6 of the Bill seeks to increase the minimum number from five to nine, and the maximum from nine to 10.
	It may be helpful if I explain the rationale behind the number of electoral commissioners in Clause 6. The increase in the minimum number of commissioners is intended to ensure that commissioners with political backgrounds—nominated commissioners—will always be in a minority on the commission as a whole. That is four out of nine. The increase in the maximum number to 10 is to ensure sufficient room to appoint a full complement of four nominated commissioners in the event of there being six electoral commissioners, as is currently the case.
	This amendment seeks to alter Clause 6, to require that the commission have exactly nine commissioners at all times. I must resist the amendment as it is unnecessarily restrictive and could hamper our policy intent, which is to ensure, in line with the recommendations of the Committee on Standards in Public Life, that there should be four commissioners with recent political experience drawn from across the political spectrum. Moreover, given that there are currently six electoral commissioners, this amendment would prevent the appointment of four commissioners with recent political experience.
	If the current number of other electoral commissioners fell to five, enabling the appointment of four nominated commissioners, we feel that there would be an increased likelihood of these nominated commissioners achieving parity with others on the board. So, if, for example, the post of one of the other electoral commissioners became vacant, reducing the total number of electoral commissioners to eight, there would be the same number of nominated commissioners as other electoral commissioners.
	We have always made it clear that we believe that it is important to seek to ensure that nominated commissioners are in a minority on the commission at all times. This is also in line with the recommendations of the Committee on Standards in Public Life. Our intention is that these nominated commissioners bring their political experience to bear in the commission's work, and so help it to become a more effective and credible regulator. However, ensuring that they are always in a minority is intended to prevent any perception of politicisation of the commission.
	Further, this amendment would remove any flexibility by always requiring the commission to have exactly nine commissioners. Potentially, it would take just the departure, for whatever reason, of one commissioner for the commission to fall short of the statutory requirement of nine commissioners. While we note that Schedule 1 to the PPER Act 2000 provides that the validity of any proceedings of the commission shall not be affected by any vacancy among members of the commission, we see no advantage in setting an inflexible number of nine commissioners. The Electoral Commission has also commented in its briefing note on the Bill that such an amendment is undesirable.
	For the reasons I have given, we believe that a requirement for nine or 10 electoral commissioners achieves a reasonable balance, ensuring enough room to appoint the full complement of four nominated commissioners, who are within a minority, and allowing for the appointment of five or six other electoral commissioners. The noble Lord has already indicated that he is not going to press this amendment. However, I hope that I have given him the background that he seeks and that I have placed it on the record.
	I turn now to the amendment of the noble Lord, Lord Hodgson. This seeks to amend Clause 7, which sets out the political restrictions on electoral commissioners and staff. The Political Parties, Elections and Referendums Act 2000 currently imposes a 10-year restriction on previous political activity for all Electoral Commission staff. Clause 7 of this Bill reduces the restriction period from 10 years to five years for the commission's chief executive, and to 12 months for all other staff. The amendment would increase the 12-month restriction period on previous political activity for all of the commission, apart from the chief executive, to 36 months.
	The noble Lord tabled an identical amendment in Grand Committee. I gathered from the informative debate that we had on the issue at the time—and perhaps my response was out of exhaustion more than any intent to be less than polite—that his concern is that a one-year minimum political restriction period is too short for any member of the staff at the commission, and so should be increased to three years.
	I share the noble Lord's concern to the extent that I acknowledge that there may be a small number of posts in the commission, other than the chief executive, that merit a requirement for a longer restriction from political activity than one year. However, I do not agree that we should impose a blanket minimum restriction period of three years on all staff. For the majority of commission posts, I firmly believe that a one-year restriction will be appropriate. It is important to note that the Electoral Commission, which has a better knowledge of what the duties of posts at the commission involve than anyone, shares this view. For posts deemed suitable by the chief executive, he will be able to designate them as being subject to a longer restriction period of up to five years, taking into account the seniority of the post, and—crucially—the likelihood of the person dealing with politically sensitive matters.
	I note the noble Lord's comments during Grand Committee that, although a person may not be in a politically sensitive role all the time—for example, staff at a more junior level—they could dip in and out of out of politically sensitive activities and so be in a position to gain access to sensitive information. Therefore, they may not be subject to a designation even if they merit it. In the light of that, he believes that a basic threshold of three years, instead of one year, for all staff is preferable to a longer restriction of period for senior staff only.
	While I appreciate the reasoning behind the noble Lord's argument, I emphasise that the chief executive's power to designate is not restricted to a particular level of posts. The chief executive will be best placed to determine whether a person's access to sensitive material is such that the post should merit a longer restriction. Overall, the proposal to reduce the restriction on past political experience for commission staff has been welcomed during the passage of the Bill to date. This warm welcome is in recognition of the overly restrictive rules that apply at present, and the fact that the recommendations of the CSPL and others for equipping the commission better to understand the field it regulates resonate with many people.
	In its briefing note ahead of today's debate, the commission recognises that the formulation in the Bill is appropriate and workable. A blanket provision requiring a 36-month period is unduly inflexible and imposes an unnecessarily long restriction on the majority of staff of the commission. I hope that the noble Lord will now feel able not to move his amendment.
	On Amendment 25, and recognising its purpose of teasing out the posts to which this might apply, the Political Parties, Elections and Referendums Act 2000 currently imposes a 10-year restriction on previous political activity for all Electoral Commission staff. Clause 7 of this Bill reduces the restriction period from 10 to five years for the commission's chief executive, and to one year for all other staff.
	Noble Lords will recall that government amendments in Grand Committee sought to provide the chief executive of the commission with the power to designate certain other commission posts as being subject to longer restricted periods of between two and five years. Before he decides to designate a post, the chief executive must reasonably believe that it is necessary to do so in order to maintain public confidence in the effectiveness of the commission in carrying out its functions. In addition, when determining the length of the proposed designation, the chief executive must take into account the seniority of the post and, crucially, the likelihood that the person holding the post will have to deal with politically sensitive matters. Once these decisions have been made, the chief executive would be required to consult the Speaker's Committee on the posts that he intends to designate and take heed of its views.
	These government amendments were intended to address the concerns raised by the commission and my noble friend Lady Gould that the five-year restriction should be capable of being extended to other senior posts in the commission, or those dealing with politically sensitive responsibilities. They made the valid point that a one-size-fits-all policy might not be appropriate here.
	Amendment 25 seeks to remove the chief executive's power to designate posts, and thereby prevent the chief executive of the commission from increasing the one-year restriction period on previous political activity for other commission posts. We are bound to resist this amendment, as it removes the flexibility for the chief executive of the commission to determine the appropriate restricted period for its staff within the parameters that the Bill sets. Having heard representations on the subject, we appreciate that there may be a small number of posts in the commission, other than the chief executive, which merit a requirement for a longer restriction on recent political activity than one year.
	I emphasise that the underlying theme of the reduced political restrictions in Clause 7 is to enable the commission to recruit staff with relevant experience of the environment that they regulate. A power for the chief executive to designate posts is not intended to detract from this underlying theme. It is right that we strike an appropriate balance between ensuring that the commission is able to employ those who have the necessary skills to enable it to be more effective and creating any perception of politicising the commission.
	For these reasons, a power for the chief executive to designate certain posts as subject to a longer restricted period is justified. The commission has emphasised that the power is important, and will enable its chief executive to designate longer restrictions from previous political activity to a handful of posts dealing directly with regulatory activities, policy or boundary decisions, which may include matters of significant sensitivity. The chief executive will also take into account the extent to which recent party-political activity may be perceived by others to compromise the impartiality of the post. Examples of posts that the commission has indicated that the chief executive may designate include, among others, the deputy chief executive, director of party and election finance, the director of electoral administration and boundaries, and the heads of the commission's Scotland, Wales and Northern Ireland offices.
	Listing those posts does not detract from the chief executive's responsibility to consider other posts where there is particular political sensitivity. The chief executive of the commission would designate these posts on the basis of deputising for the chief executive, or the political sensitivities of the posts. The chief executive of the commission will be best placed to decide which posts merit a longer restriction period, and what that period should be. That is why the Bill does not impose a blanket longer restriction on all senior posts. Some senior posts may merit a longer restriction period, while others will not. Likewise, some relatively junior posts may merit designation.
	Having said that, we appreciate the valid concerns that the power should not provide the chief executive with an unfettered discretion to designate posts for a longer restriction period. It is for this reason that the power sets out specific tests that the chief executive must believe have been met, and factors which he must take into account before he designates a post; for example, the seniority of the post, and how likely it is that any holder of the post will be required to deal with politically sensitive matters.
	These criteria show that we are mindful that the chief executive should use this power responsibly. The power also includes a further check on the discretion provided here through the inclusion of a requirement for the chief executive to consult the Speaker's Committee on the posts that he intends to designate. A duty to consult will mean that any view put forward by the committee in relation to a proposed designation will have to be taken into account, and taken seriously, by the chief executive.
	I reiterate that the commission does not envisage that this designation would apply to more than a handful of posts within the staff body, and in each case the commission would consider the merits of the case for designation. Additionally, the commission will publish information regarding the designation of posts on an annual basis. With the steps that we have taken to ensure that the power to designate is used appropriately, I hope that we have reassured the noble Lord and that he will feel able to withdraw his amendment.

Lord Brooke of Sutton Mandeville: My Lords, in line with the intimation of my opening speech, I found the Minister's explanation just as satisfactory when uttered in the Chamber as I had when it was on the written page. I beg leave to withdraw the amendment.
	Amendment 23 withdrawn.
	Clause 7 : Political restrictions on Electoral Commissioners and staff
	Amendments 24 and 25 not moved.
	Amendment 26
	 Moved by Lord Tunnicliffe
	26: After Clause 7, insert the following new Clause—
	"Education about systems of government and EU institutions
	In section 13 of the 2000 Act (education about electoral and democratic systems), paragraphs (b) and (c) of subsection (1) (Commission's duty to promote public awareness of systems of government and EU institutions) are omitted."

Lord Tunnicliffe: My Lords, I will speak also to government Amendment 123 and it will be useful for me to speak in anticipation of Amendment 27.
	Section 13 of the Political Parties, Elections and Referendums Act 2000 sets out the Electoral Commission's function to educate people about electoral and democratic systems, systems of local and national government, and institutions of the European Union. Government Amendment 26 would restrict the Electoral Commission's public awareness role by removing the commission's duty in relation to current systems of local and national government in the United Kingdom and the European Union. The commission's duty to educate people about current electoral systems in the United Kingdom under Section 13(1)(a) is not affected by the amendment.
	The purpose of the amendment is to clarify that the commission's function under Section 13 is to promote public awareness of current or pending electoral systems in the United Kingdom and any matters which it considers are connected to these systems. I should emphasise that the wording of Section 13(1)(a)—
	"matters connected with any such existing or pending systems"—
	will still allow the commission to provide information about systems of local and national government and the European Union, but only in so far as it is needed in the context of the commission carrying out its function of educating people about current and pending electoral systems. So, for example, to help promote understanding about existing and pending electoral systems, the commission will be able to provide information about how Parliament, or the EU or local government, actually works.
	In practice, the commission's function will be, as it is now, to provide information on the mechanics of the electoral process, including electoral registration procedures, how to vote and explaining any changes to the electoral system and connected matters. We believe that it is appropriate that the commission focus on this area of its expertise. The amendment is in response to amendment of the noble Lord, Lord Norton of Louth, in Grand Committee, which sought to restrict the commission's duty in Section 13 along these lines. At the time, we were concerned that the noble Lord's amendment would prevent the commission commenting about systems of local and national government or the institutions of the European Union, which is important in the context of educating people about electoral systems. However, we are now satisfied that the scope of Section 13(1)(a) will enable the commission effectively to discharge its duty to educate about existing and pending electoral systems.
	The commission has similarly confirmed that it is not concerned by the amendment. Government Amendment 123 makes the necessary consequential repeals to Section 13 by deleting references to systems of local and national government throughout the section. These amendments are in line with our acceptance of the Committee on Standards in Public Life's recommendation that the commission should retain a statutory duty to educate people on the mechanics of the electoral process but should no longer have a wider statutory duty to encourage participation in the democratic process.
	That is not to say that the wider democratic engagement is not important. It is vital to a healthy democratic system that people who are eligible to vote are encouraged to do so and participate. The Government are in the process of taking provisions through Parliament that will place local authorities under a duty to promote democracy. The duties to promote democracy are set out in Clauses 1 to 9 of the Local Democracy, Economic Development and Construction Bill which has recently passed from this House to another place. These provisions are intended to work alongside the duty of local electoral officers to encourage participation which is set out in the Electoral Administration Act 2006. I hope that noble Lords will be assured that in limiting the commission's powers to exclude a wider democratic engagement role, these important functions will be carried out by local authorities.
	Amendment 27 seeks to require the Secretary of State to provide a written response to reports issued by the Electoral Commission under Section 6 of the Political Parties, Elections and Referendums Act 2000 within six months of publication. In Committee we agreed to consider an identical amendment tabled by the noble Lord. There was significant support for the amendment among the Committee Members and from the commission itself. We have given it careful consideration. I fully appreciate the concerns behind the amendment, which are that the Electoral Commission reports are important and should be given timely consideration. An early response ensures that the commission's recommendations are appropriately addressed and taken account of. It is right and appropriate that the Government should aim to respond promptly to the commission's report on issues under Section 6. There is no doubt the Electoral Commission has built up considerable expert knowledge in these areas. Therefore, I am willing to make a commitment that the Government will endeavour to respond to the Electoral Commission's report issued under Section 6 within six months. Where we are not in a position to do so, we will provide the commission with reasons why that is the case within the six month timeframe.
	I hope the noble Lord will be satisfied with such a commitment which, while having the same effect as his amendment seeks, is unlikely to have the potential adverse consequence that placing a requirement in statute might have. As the noble Lord pointed out during Grand Committee debates on the issue, there are other examples where the Government have made a commitment to respond to certain reports within a specific timescale, but without a statutory requirement to do so. For example, the Government seek to respond to Select Committee reports within two months of publication. This requirement is a convention and is not statutory. Our commitment would provide a clear expectation that the Government would respond to reports within six months, in effect achieving the noble Lord's objective. The Electoral Commission has indicated in discussions with officials that its key interest is in ensuring a timely response to these reports and it is not especially wedded to doing so via a statutory commitment. On that basis I hope the noble Lord will agree not to press his amendment. I beg to move the government amendment.

Lord Pearson of Rannoch: My Lords, can the noble Lord confirm that Clause 6 of the existing Bill would prevent the recent fiasco of ballot papers in many constituencies being printed in such a way that the name of my party, the UK Independence Party, which comes at the end of the alphabet, was in some cases printed over the back of the front page of the ballot paper and in some cases was almost sealed down? Is that the sort of matter on which the Government would expect the Electoral Commission to report? If so, will it do so? I have tabled a specific amendment on this for the next stage of proceedings but it is a timely moment to ask that question.

Lord Norton of Louth: My Lords, it may be appropriate if I respond to the Minister's speech in moving the amendment. I very much welcome Amendment 26 tabled by the Minister and to which I have added my name. The amendment has the support of the Electoral Commission. The amendment meets the points I raised in Committee. It helps contribute to what the noble Lord, Lord Tyler, referred to in Committee as the clarity of purpose of the Electoral Commission. As it stands, the 2000 Act imposes a duty on the commission to promote awareness of systems of government and of the institutions of the EU. The amendment removes these duties, enabling the commission to focus on raising public awareness of electoral systems and, as the Minister stressed, matters connected.
	As the Electoral Commission puts it in its own briefing:
	"The Commission's main focus is already on electoral systems—encouraging and explaining voter registration and providing information on how to take part in elections. The amendment would allow the Commission to continue to provide some information on systems of government and democratic institutions where this is important in explaining the relevance of the democratic process, while also providing a clearer focus".
	I am grateful to the Minister for having listened to the case advanced in Committee and for bringing forward the amendment. My amendment, Amendment 27, seeks to ensure that reports from the Electoral Commission, made under Section 6 of the 2000 Act, are responded to by the Secretary of State in writing within six months or for there to be an explanation of why it has not been possible to do so.
	The amendment has the support of the Electoral Commission and enjoyed cross-party support in Grand Committee. The only resistance came from the Minister, who argued that for the Secretary of State to have to write and explain if a response was not forthcoming after six months would impose a bureaucratic burden. The reaction to that argument from other Members of the Committee persuaded the Minister of the need to reconsider. He has clearly done so. I therefore welcome the commitment of the Government to respond to commission reports within six months. It delivers what I sought to achieve in my amendment.
	Perhaps the Minister would confirm that the commitment extends to reports made by the commission under Section 5 of the Act as well as Section 6. My amendment was confined to Section 6, but the commission has said in its briefing that it would welcome the commitment covering reports made on elections and referendums. If the Minister is able to confirm that, it will be extremely helpful.
	I commend the Minister for the constructive responses to both the amendments I moved in Committee. What he has brought forward meets the points I advanced. I think these changes help the Electoral Commission in fulfilling its core purposes.

Lord Pearson of Rannoch: My Lords, is it in order for me to ask a question about Amendment 26 as well? If the European Commission is not going to be encouraged to educate the British people about the European Union, then who is? It is a very sad fact that elections to the European Parliament—

Lord Tunnicliffe: My Lords, I am not going to respond to a question in the noble Lord's second speech as this is Report stage.

Lord Pearson of Rannoch: My Lords, once again the political establishment has got out of revealing to the British people what they were voting for on 4 June.

Lord Henley: My Lords, I agree with my noble friend Lord Norton that we are grateful that the Government have responded positively to his Amendment 27. I presume that my noble friend accepts that his amendment is no longer necessary as the Government have given an assurance that they will respond within an appropriate time, ideally six months, to any report from the commission. It might not necessarily have been a good idea to have had such a provision on the statute book; it is very prescriptive, although it is improved by proposed new subsection (2). But as my noble friend put it, we are very grateful that the Government have responded positively to the amendment he moved in Committee.

Lord Tunnicliffe: My Lords, I thank noble Lords who participated in the debate. On the first question asked by the noble Lord, Lord Pearson, the Electoral Commission is independent and would determine which issues to include in its reports. Section 5 of the 2000 Act requires the Electoral Commission to report on the conduct of elections and we would expect those reports to cover all relevant issues.
	I can see no reason why my assurance should not apply to Section 5 as well as Section 6. However, I have to speak with some care; perhaps the best way to leave this is to say that I can see no reason why not. I will write to the noble Lord confirming that, or not, and if he is dissatisfied he can of course bring the matter up at Third Reading.
	Amendment 26 agreed.
	Amendment 27 not moved.
	Amendment 28
	 Moved by Lord Pearson of Rannoch
	28: Before Clause 8, insert the following new Clause—
	"Permissible donors
	(1) In section 54 of the 2000 Act (permissible donors) is amended as follows.
	(2) In subsection (2) paragraph (a), after "register" there is inserted "(or eligible to be registered in an electoral register)".
	(3) After subsection (7) there is inserted—
	"(7A) Where a registered party accepts a donation from an individual who is eligible to be registered in an electoral register, the treasurer of the party shall report the donation to the Electoral Commission, together with the reasons for accepting the donation."."

Lord Pearson of Rannoch: My Lords, noble Lords may recognise the first part of this amendment as the same which the Conservative Party tabled to the Political Parties, Elections and Referendums Bill in Committee in your Lordships' House on 12 October 2000, as reported at cols. 550 to 571 of the Official Report. This followed the recommendation of the report of the noble Lord, Lord Neill, which gave birth to that Bill, that a party should have been able to accept a donation from someone whom it knew to be eligible to be on the electoral roll, even if they were not in fact on it.
	Lord Mackay of Ardbrecknish, who moved the amendment, cited people who might not want to be on the electoral register for security reasons, students who failed to register or others who were moving round quite a bit who were inadvertently missed off for those and other reasons. He repeated, and I repeat now, that the object of that Bill, and this one, was and is to prevent foreign and anonymous donations, not to penalise innocent donors without good reason.
	The Government, in the shape of the noble Lord, Lord Bassam of Brighton, did not accept these arguments, saying:
	"It would ... be no easy matter for a registered party to establish whether a donor whose name did not appear on an electoral register was nevertheless entitled to register".—[Official Report, 21/11/00; col. 695.]
	It might be or it might not be; that is what this amendment seeks to address. Lord Mackay pressed his amendment to a Division, and lost. This is, of course, inconvenient to my case, but I point out that the Division took place at about 7.15 pm and, going by the noble Lords who supported it, it does not appear to have been Whipped by the Conservatives.
	Since then, a case has occurred which I submit justifies the Neill report's original recommendation, and therefore reconsideration of this amendment, especially with its proposed new subsection (3), to which I shall return. I alluded to the case in question at Second Reading and in Committee in the hope of eliciting a lighter and more reasonable touch from the Electoral Commission, but without success. The story is, briefly, this. The largest donor of UKIP—my party—gave some £370,000 in a year when he had let his house and been inadvertently left off the electoral register. He had been a bona fide resident taxpayer all his life, had donated as such in previous years, and has indeed done so since. So the party knew that he was a permissible donor but did not realise that he had been left off the electoral roll, without his or its knowledge, for one year only. I should have thought that that qualified as a reasonable excuse within the spirit of the Minister's Amendment 97, which he so eloquently moved and spoke to in Committee on 5 May at cols. GC 167 to 171 of the Official Report. It was, after all, obviously an innocent mistake.
	In this respect, I note also the Minister's latest circular on the Bill dated 12 June on the commission's enforcement policy in which he says that it is suggested that,
	"the Commission may decide to take no action at all if they were of the view that 'the contravention was so trivial or inadvertent, and the risk of the regulated entity failing to meet the relevant obligation in future so slight, that it is not appropriate to take any action'".
	The noble Lord went on to say that alternatively the commission might believe that an individual or organisation needed to improve its capacity to comply with the law and would then set up some form of training. I should have thought that either course of action was pretty obvious in this case.
	In its latest briefing on the Bill, the commission says that it does not support the amendment, because the proposal,
	"to widen the scope for permissibility along eligibility to register would create additional burdens and present uncertainty for regulated entities in confirming permissibility of donors".
	That is where proposed new subsection (3) of the amendment comes in. If a treasurer receives a donation from someone who is not on the electoral roll but whom he knows is eligible to be on it, then he may accept the donation but he must report it to the commission, together with the justification for his certainty. I think that I am right in saying that the donation is likely to be more than £7,500 and therefore worth taking just that little bit of trouble over.
	I have to say that the Electoral Commission has behaved in a completely different way. It took the United Kingdom Independence Party to court, where it lost. The judge found, all the same, that £18,000 of the donation which had to be repaid was bona fide and should have been allowed. Not content with having lost in court, the Electoral Commission has now gone for judicial review, and the case is being referred back to the court. Further than that, the commission has made it clear that, if necessary, it will take the case to the High Court, which is something that the donor in question and UKIP cannot possibly afford. I do not call that a light touch. However, I think that this amendment should help. If a treasurer knows that a donor is permissible, it is not difficult to justify that to the Electoral Commission.
	There is one other point that I should bring to your Lordships' attention. I believe that I am right in saying that the Bill does not change the present Act's provisions about legacies to political parties, so bequests can be accepted from anyone who was on the electoral register at any time within five years before death. Someone could live abroad in a tax haven for up to five years before he dies and still leave a large sum to a political party. This means that physical presence on the register in the year of donation does not always apply. I suggest that it should not apply, as the amendment proposes. I am not criticising the legacy provisions, but mention them in support of the amendment, which I trust your Lordships will be able to accept.

Lord Anderson of Swansea: My Lords, there may or may not be anomalies in respect of legacies, but I fail to follow the noble Lord's reasoning. He seeks to make a general case out of a particular problem that affects his party. As I understood it, he suggested that the individual in question had let his house. If that be the case, he would not in any event be resident and presumably not eligible to be on the register. The noble Lord said that the treasurer would accept money when he knew that someone was eligible. That begs many questions. How does he ascertain whether someone is eligible? There are proper tests. It is, frankly, too difficult and the noble Lord strives too hard to make a general point out of a particular matter, which not only affects his own party but is now, in any event, the subject of litigation.

Lord Neill of Bladen: My Lords, I declare an interest in that I was the chairman of the standards committee when it produced its original report on political parties. Another Member present, the noble Lord, Lord Goodhart, was with me on the committee. We indeed used such language. We may have created the term "permissible donor", but we then had to define it, which we did as including people who were on the electoral register or were entitled to be on it. I am not addressing any particular case; the noble Lord, Lord Anderson, has argued about the amendment that the noble Lord, Lord Pearson of Rannoch, has spoken to.
	In life there could obviously be reasons why somebody's name was not on the register. The simplest example is of somebody who thinks that they have sent in the document that will procure their registration but it has been lost in transmission. A second easy example would be of some administrative error by officials, meaning that someone had not been registered, although the document was duly received. It may even be a case where somebody has been negligent and should have taken a step but did not. In all these cases, the underlying policy is being complied with. The money comes from somebody who could have been on the register but for this error or fault, call it what you will.
	I ask your Lordships and the Minister to think again about this provision. What is urged against it is that it means a difficult inquiry into whether someone is entitled. It really hinges on whether they can produce proof that they were entitled to be on the register when they gave money to the local party. The party can then take the money and send the report to the commission. There is no sidestepping supervision. There will be supervision, but in the rare circumstances where this may happen it seems perfectly reasonable to allow the text as originally proposed by the committee.

Lord Henley: My Lords, the noble Lord, Lord Pearson, takes us back in history to the 2000 Act, whose passage I do not clearly remember. If, as he assures me is the case—I have not had a chance to check—my late friend Lord Mackay of Ardbrecknish moved an amendment similar to this one, it must have been a jolly good amendment. I am glad that he pressed it to a Division. I must confess that I was Chief Whip at the time and I cannot remember what instructions were issued to my late friend—not that he would necessarily always take them—on that occasion. Again, the noble Lord, Lord Pearson, assures us that the vote was at 7.15 pm and, from his examination of the Division List, it does not look as though I tried too hard to assist my late friend in securing the successful passage of that amendment. Obviously, in the event, we were unsuccessful.
	More seriously, I take the point made by the noble Lord, Lord Neill of Bladen, about how easy it is to make an error that will leave one off the electoral roll. I am, like many noble Lords, entitled to put myself on the electoral roll in two places: at home in Cumberland and where I live in London when I attend your Lordships' business. This year, purely for administrative reasons, because I happened to be away at the crucial period, I failed to put myself on the electoral roll in London. I believe that I have now been put on it. Certainly, I have written to Westminster City Council and am assured that this is being corrected. It is just an example of how easy it is to make a small error of the sort that could leave one off the electoral roll. The noble Lord, Lord Anderson, says that in the case cited by the noble Lord, Lord Pearson, the individual had let his house. Therefore, he ought to have been living somewhere else or out of the country. He should have known. However, it is easy to move from one home to another and forget that you have not registered in the second place, having let the first home. One should not dismiss the idea out of hand in the way that the noble Lord, Lord Anderson, did. I certainly give a degree of qualified support to the first part of the noble Lord's amendment, particularly since, as he said, he copied it from one moved by my late friend Lord Mackay of Ardbrecknish.

Lord Bach: My Lords, this amendment relates to the permissibility requirements surrounding donations made by individuals. I make it quite clear that, in what I have to say, I am not referring in any way to any case that may be pending on this matter. Currently, the 2000 Act requires that, to qualify as a permissible donor, an individual must be registered on an electoral register. Parties may accept donations of over £200 only if they are deemed permissible under the terms of the 2000 Act, although noble Lords will be aware that this threshold is to be raised to £500 under provisions in Clause 17 of the Bill. If a party receives a donation from an impermissible source, it is required to return it within 30 days; it is an offence not to do so. Additionally, if a party accepts a donation that is impermissible, the Electoral Commission may apply to a court to seek forfeiture of an amount equal to the donation. Any amount forfeited is paid into the Consolidated Fund.
	Let me respond to Amendment 28, which concerns the existing requirement in the 2000 Act. As the House knows, the Act is based largely on the recommendation made in the fifth report of the Committee on Standards in Public Life, then chaired by the noble Lord, Lord Neill of Bladen, who has already spoken in this debate. The House and the country owe a huge debt of gratitude to the noble Lord, Lord Neill, and the committee's members. The Government agreed with the vast majority of the report's recommendations, but on individuals to be regarded as permissible donors we differed slightly from what was recommended. The Neill report, as we have heard from the noble Lord, recommended that a donation could be properly received from a person who was on the register or eligible to be on the register. We disagreed with that recommendation and set out why in our response to the Neill report:
	"Checking that a particular donor appears on the electoral register offers a test that is both conclusive and simple to administer. It would be far less straightforward for political parties to verify that a donor not appearing on the register was nevertheless entitled to do so. It is in the interests of the parties to have available a test which offers certainty as to the eligibility of a donor".
	Our view has not changed over the years. Political parties have an obligation to ensure that the donations that they receive above the threshold are permissible. We should not look to add a further measure that would increase the administrative burdens on parties. We are concerned that the measure proposed by the noble Lord, Lord Pearson, would do that.
	That view is shared by the Electoral Commission, as the noble Lord, Lord Pearson, frankly admitted in moving his amendment. In commenting on this amendment, the commission said:
	"The proposal to widen the scope for permissibility along eligibility to register would create additional burdens and present uncertainty for regulated entities in confirming permissibility of donors".
	I hope that the noble Lord, Lord Goodhart, will forgive me for mentioning him. The noble Lord, Lord Neill, has pointed out that he, too, was a member of the committee at that time. When this matter was considered in the debates on the 2000 Act, the noble Lord, Lord Goodhart, said:
	"The Government put that forward—this was stated in their reply to the Neill committee—because administratively it is a relatively simple matter to check who is in fact on the electoral register, but it is much more difficult to find out whether someone who, let us say, sends a cheque drawn on a British bank in a letter from an address in London is in fact eligible to be on the register. It is not of course difficult for anyone who is eligible to be on the register to put themselves on the register. For that reason, the Neill committee, when this proposal was put to it, did not object to it being brought forward in the form in which it is brought forward by the Government".—[Official Report, 12/10/00; col. 546.]
	I am sorry not to have spoken to the noble Lord earlier and told him that I intended to use his words.

Lord Goodhart: My Lords, I have no objection to the noble Lord using my words. If I said it then, I am sure that I meant it.

Lord Neill of Bladen: My Lords, perhaps I should point out that I had ceased to be chairman of the committee when it was referred back for the Bill.

Lord Bach: My Lords, I am grateful to both noble Lords. With great respect, we think that the noble Lord, Lord Goodhart, was correct on that occasion, just as he is tonight.
	The noble Lord, Lord Pearson, seeks to draw an analogy between what his amendments would achieve and the reasonable excuse provisions elsewhere in the Bill. I am afraid that we do not see a clear link between these provisions and the amendment. The government amendments introducing a defence of reasonable excuse in relation to the obligation to report would not give parties carte blanche. We do not think that it would be wise to water down the important obligation to verify the permissibility of donations above the recordable threshold, nor does the Bill seek to do so. It goes without saying that I will not speak about specific cases.
	It is for those reasons that we cannot accept the noble Lord's amendment. The recurrent requirement for an individual to be registered in an electoral register offers a test that is simple to operate for all concerned and we do not want to change that.

Lord Pearson of Rannoch: My Lords, I am grateful to all noble Lords who have spoken, including the noble Lord, Lord Anderson, who rightly said that I was making the general out of the particular. However, that is what often happens. This is a particular case, but other examples have been mentioned by the noble Lord, Lord Neill, and others. The general does exist and this case merely proves it.
	I am grateful to the noble Lord, Lord Henley, for what I took to be support for this amendment, but I certainly do not intend to press it to a Division. I can see that there is little flexibility from the Government on this point, which is a pity. The amendment would not make life more difficult or complicated for treasurers. If a treasurer knew that the person could be on the electoral register, he would merely have to give reasons for that knowledge to the Electoral Commission. There is no difficulty about it at all. However, I can see that the amendment will not be accepted, so I do not want to take up more of your Lordships' time. I trust that what is on the record may be useful for the future and I beg leave to withdraw the amendment.
	Amendment 28 withdrawn.
	Clause 8 : Declaration as to source of donation
	Amendment 29
	 Moved by Lord Campbell-Savours
	29: Clause 8, page 7, line 14, at end insert—
	"(1A) In section 54 of the 2000 Act (permissible donors), in subsection (2)(a), after "register" there is inserted "who is resident in the United Kingdom for the purposes of Part 14 of the Income Tax Act 2007 and is not a non-domiciled United Kingdom resident"."

Lord Campbell-Savours: My Lords, I shall also speak to Amendment 30. These amendments were debated at great length in Committee. They were originally tabled in the House of Commons and have been vigorously opposed by the Government at all stages. I shall argue on two counts: first, the merits of the amendment are set out in the letter from Mr Gordon Prentice MP; and, secondly, the procedural issues arising out of the handling of the amendments in the Commons, as set out in the letter from Martin Linton MP.
	The case on merit, in my view, turns on whether a person who is not liable to tax in the United Kingdom should be permitted to make a substantial political donation that may well run into millions of pounds to a political party, and thereby influence the result of a general election. That is the question. I believe that they should not be allowed. Individuals collectively pay their taxes in the belief that, having done so, it is they who should have the right to influence how their taxes are used—not some person who deliberately avoids liability to United Kingdom taxation. It is the payment of and liability for tax that gives us the right to decide. It is our money and not theirs. It is for us, who are liable to tax, to decide which Government should be in place to decide how our taxes are used.
	I shall repeat the scenario I put to the Committee. I shall exaggerate to make my point. If a Ukrainian billionaire philanthropist, entrepreneur, oligarch, public benefactor, or whatever acquires British residency, buys a home in London, spends most of his or her time abroad, refuses to make him or herself liable for tax in the United Kingdom, and then offers a political party a £5 million donation, should the political party be permitted to accept it? The public would be appalled; the political party would be discredited; and Parliament's credibility would be further undermined. As the law stands, that can happen. My amendment would make it unlawful for any person who is not UK-liable for tax purposes, and is not a non-domiciled UK resident, to make a substantial donation to a political party. A cap on such donations would be defined in law.
	The amendment is based on the simple principle: if you want to donate you have to be liable to tax. Of course, there are limitations. If a person is not ordinarily resident, he or she will be liable to tax on income arising only in the United Kingdom. Only someone who can spend 183 days or more in the UK is a UK resident under the six-month rule. Someone will be regarded as a resident if they come to the United Kingdom regularly and after four tax years they visit during those years for an average of 91 days or more a year. I am told that that is the current position.
	We know that non-UK taxpayers can have a huge impact on the outcome of general elections. The Rowntree report published last year, Purity of Elections in the United Kingdom: Causes for Concern, states:
	"There is substantial evidence to suggest that money could have a powerful impact on the outcome of general elections, particularly where targeted at marginal constituencies over sustained periods of time".
	A well-known public figure, who lives offshore and refuses to make himself liable to tax in the United Kingdom, converted a £3 million loan into a gift to a political party. He then went on to donate a further £100,000 to that party and an additional £30,000 to a mayoral election campaign. Do we really believe that that is acceptable? The Electoral Commission has stated:
	"The permissibility requirements in the 2000 Act are intended to ensure that only people and organisations with a close relationship to the UK can donate to political parties. It is for Parliament to decide if this is appropriate".
	That is what the amendments do.
	How would they work in practice? A person wishing to make a donation simply ticks a box on their tax return and the Electoral Commission need only certify with HMRC that that is the case. It would be a simple procedure in circumstances when a donation could on occasion influence the result of a general election. Of course, it would apply only in circumstances when a donation exceeded a threshold laid down in regulations. The House may want to consider a letter to Mr Tony Wright, chairman of the House of Commons Public Administration Committee and the House of Lords Appointments Commission. The letter announced the changes to the selection criteria for Peers. It stated:
	"I am writing to notify you of a slight strengthening of the selection criteria which the Appointments Commission will in future use when assessing nominees for non-party-political peerages. The Commission has agreed these changes as part of its review of policies and procedures and in the light of experience".
	A copy of the press notice is attached, which states:
	"The Commission also wants to strengthen the existing requirement that a nominee should be resident in the UK for tax purposes, and be willing to confirm his or her acceptance of the requirement to remain so. This strengthening will also be reflected in our vetting criteria for future party-political and other nominations for peerages".
	Surely, if appointment to the Lords requires UK residency for tax purposes and a liability to tax within the United Kingdom, it must follow that donations of millions of pounds to political parties, which could influence general elections to the elected House of Commons, must have at the least the same tax liability requirement. As many of my colleagues in this House have asked me over recent weeks, how can the Government justify the position that they have taken on this issue?
	If the high standards which the public demand of Parliament are to be met in a way that the Prime Minister recently proposed, surely now is the time to deal with this utterly unacceptable practice in our tax system? The Government last week circulated to Members on this side of the House—and to all Members, I presume, in the spirit of fair play—their explanation and, indeed, justification for refusing to accept these amendments. They gave a number of reasons, which I shall take individually. The Government's own circulated document says,
	"The amendments would restrict only one form of democratic participation (making a donation) according to tax status whilst leaving other forms unrestricted".
	That is to say:
	"standing as a candidate for and sitting in a legislature, voting or campaigning as a 'third party' pressure group".
	The Government say:
	"There is a real Article 11 ECHR (right to freedom of association) issue. It may be lawful to restrict who may give donations if the restriction is justified and proportionate. But a tax status restriction is problematic if it restricts donations but not voting",
	or,
	"standing for Parliament".
	That is their justification.
	In other words, they are saying that a tax status restriction is problematic if it restricts donations but does not restrict voting. They then pray in aid Article 11 of the Convention, somehow likening the right of a single individual to cast a vote in the Pimlico Churchill Gardens polling station at a general election to the right to donate millions of pounds to a political party and thereby influence the result of that whole election campaign. The logic behind that is ludicrous: one vote equivalent to a contribution of millions of pounds. I feel sure that a few lawyers in this House would readily make a meal of that excuse.
	The Government then say:
	"There is a risk that the amendments would result in donations being diverted through other routes ... companies, unincorporated associations".
	My response to that is: why do the Government themselves not table amendments in this House on Third Reading or, if the amendments were to go through, on the Commons consideration of Lords amendments to deal with that problem, if it exists? I invited my noble friend to do so in Committee. If the principle of a tax restriction were to be established in this House, there is no reason why further work could not be done by the Treasury on tax law relating to "companies and unincorporated associations".
	They then say there is a,
	"difficulty in establishing whether an individual is resident and, particularly, domiciled. HMRC does not routinely hold this information for the majority of taxpayers. Establishing residence and domicile would usually require HMRC to undertake an investigation at considerable time and expense. It is not clear how parties would satisfy themselves before deciding whether to accept a donation. Resident status is 'retrospective' in that it is dependent upon the amount of time an individual has spent in the UK in the previous 12 months, so very difficult to establish at a given point in the middle of a year if an individual is 'resident'".
	It,
	"also risks treating individuals unfairly who may not know whether they are domiciled or not".
	These amendments place no responsibility whatever on HMRC to investigate the tax status of an individual. It is the individual making a tax return who makes the declaration; he or she is responsible. If HMRC indicates to the Electoral Commission that the donor's tax return indicates UK tax status, signed off under the statutory declaration by the taxpayer, then the commission would have met the requirements of the law under these amendments, if carried by the House. It would be for the donor to establish whether he or she was domiciled; or, they could take professional advice on that matter if they were not aware whether they were domiciled.
	They then go on:
	"In order to enforce the new requirement, recipients of donations and the Electoral Commission would need to be able to verify that a donation was permissible and would require access to HMRC information. HMRC has a statutory duty to maintain taxpayer confidentiality".
	In reply to that, let me make it absolutely clear that all the Electoral Commission needs to know from HMRC is: has the donor ticked the box on a tax return? Recipients of donations would have no need whatever to approach HMRC. Then, they say that they,
	"need to be mindful of commitment in 2008 Budget that there would be no further changes to the taxation regime for non-domiciles in the rest of this Parliament or the next".
	To that, I reply: there is nothing in my proposed amendments that would increase the liability to tax. Indeed, I could not table such an amendment in this House.
	I have been asked what would happen if, despite a Revenue declaration, a party was found to have been misled by a donor and had received an impermissible donation. In my view, it would be a perfectly reasonable defence for a party to argue that it received approval for the donation on the basis of HMRC's confirmation to the Electoral Commission that the box had been ticked. However, it would concentrate the minds of political parties when seeking to ensure the validity of donations.
	Finally, I turn to what some people refer to as the most important argument of all. What happened when these amendments were originally moved in the Commons? They followed on the important work done, over a number of years, by Martin Linton. These two amendments were originally moved in the Commons by Gordon Prentice. They were supported by 218 Members of Parliament—probably among some of the highest signatory endorsements for amendments in the history of the House of Commons. They were supported by nearly all political parties, yet they were not debated. They got caught up in a procedural wrangle.
	These amendments constituted the fourth group out of a total of six scheduled for debate on day two of proceedings on the Bill. I do not want to go into the detail, but they caught up in an argument over a Programme Motion, which effectively excluded them under House of Commons procedure. As I say, they were neither debated nor voted on—a classic example of a Commons failure to properly scrutinise amendments. This is our opportunity to show the Commons the value of scrutiny arrangements in the Lords. The Commons are desperate to have the opportunity to debate and vote on these amendments, and many a screen is going in that House this evening with people watching our debate. They want the opportunity to vote on these amendments. We can give them that opportunity. I beg to move.

Lord Tyler: My Lords, I and my colleagues very strongly support these amendments, as we did in Grand Committee. Indeed, my noble friend Lord Oakeshott may refer to the specific issue of how the criteria for entry into this House now follows the pattern to which the noble Lord, Lord Campbell-Savours, has already referred. For goodness sake, if it is practically possible to identify the tax status of those entering this House, it must surely also be possible to do the very same thing for donors to political parties. I intend to speak only briefly on this issue, as I hope that we shall also hear from the noble Lord, Lord Rooker, who has put his name to these amendments.
	As the noble Lord, Lord Campbell-Savours, has already said, this set of amendments had the support of an unusually large number of Members of Parliament, from the Back Benches of all parties. They were tabled by Mr Gordon Prentice but not put to the vote; by an accident of history, they were not passed there. However, unless we allow ourselves the privilege of putting this into the Bill, it will never be discussed in the House of Commons, despite the support of a very large number of Back Benchers. The effect is that it would require a permissible donor to be resident in the United Kingdom for the purposes of Part 14 of the Income Tax Act 2007, not simply to be a non-domiciled UK resident.
	When we discussed this in Committee, Ministers came up with a number of apparent practical difficulties. I suggest to them that where there is a will, there is a way. It is important that they should be forced to look carefully at the practicalities of this between now and Third Reading, and if they cannot accept that it is practical to do this at that stage, we should nevertheless demand that there is an opportunity for the other place to discuss this. There is an issue of principle here. Members of your Lordships' House who are steeped in history will recall that the rebels in the United States went under the great slogan, "No taxation without representation". In a sense, we are turning that upside down and saying, "No representation without taxation". That is the basic fact. It is surely right that no person who is not liable for tax in the United Kingdom should be permitted to influence the use of taxpayers' money, money paid by those who do pay tax and are liable—you and me. That should be an intrinsic principle.
	There is a subsidiary issue that I would like to draw to the attention of the Minister at this stage because it arises out this. In his letter of 12 June, he wrote:
	"I know that concerns have been expressed about the potential for making multiple donations just below the thresholds to avoid the recording and reporting requirements".
	In the otherwise very comprehensive briefing that he has given at all stages, the Minister has been very conscientious in giving us a response to a query or a concern of that sort, but no such response appeared in this letter, at Second Reading or in Committee. A foreign donor could very easily avoid the restrictions of reporting or recording by simply making a payment every week of the year, but just below the threshold— £1 below the threshold every week of the year—so we have to be extremely careful. Even if this amendment is passed, and I hope it will be, we must be very careful that that other loophole is not still available to foreign donors who, because they keep just below the threshold, are not required to be recorded or reported to the commission.
	If we leave the Bill as it is, without a clear statement that these sorts of donations from foreign sources are not permissible, the Bill will not fulfil the requirements that the Government have placed upon it. Even since the Bill was in Grand Committee, there is greater awareness of the potential corruption of our political system by people with very large chequebooks who can buy their way into influencing a relatively small number of constituencies, the marginal seats. It takes us right the way back to the purchase of seats before the Reform Act 1832. As the noble Lord, Lord Campbell-Savours, said, unless we stand up for the right of citizens of this country who pay taxes to be the people who decide how our political system works, the House of Commons will not get its opportunity, and the Bill will be weaker for it.

Lord Borrie: My Lords, my noble friend Lord Campbell-Savours has made a powerful case not only on the substance of the matter, but on enabling the other place, which was prevented from discussing the matter, not only to discuss but to determine whether a restriction should be placed on non-UK residents making donations to political parties.
	My noble friend may not have drafted the perfect amendment because, for example, it seems to leave it possible for non-UK residents to make donations indirectly through an unincorporated association or a company, but unless the Minister undertakes this evening to bring forward an improved amendment with similar objectives to those of my noble friend Lord Campbell-Savours, I am inclined to vote for his amendment so that MPs and parliamentary draftsman can pool their respective skills to improve upon it.
	It may be said that restrictions on donations is restricting one form of democratic participation according to tax status while leaving other forms unrestricted. I do not regard the making of huge, unlimited donations in the same light as the right to vote, the right to have fair elections or the right to stand as a candidate for the other place. I doubt the suggestion that a restriction on donations might breach Article 11 of the European Convention on Human Rights. This has been raised by the Government with no supporting evidence or legal argument; they simply posed the view that this restriction on donations suggested by my noble friend would be a breach of the provision for freedom of association and assembly. There are restrictions on the right to vote in many of the convention countries, including our own. We are contemplating reducing the voting age. There are restrictions on the way in which elections are run. Surely, if it is suggested that restrictions on the finance that may be provided by a donor to a political party contravene Article 11, it would suggest that Article 11 of the convention is rigid, clear and specific. However, I am sure that it is not so, and I cannot imagine that a full, successful argument could be made that my noble friend's proposal would result in a breach of the convention. I support my noble friend.

Lord Williamson of Horton: My Lords, I agree with the purpose of the amendment. Over 10 years, I have taken very great care not to criticise on the Floor of this House the legislative procedures in the other place. I say only that I am depressed that an amendment on this question, which was tabled for Report in the other House in the names of 216 or, possibly, 218 Members of Parliament was never discussed because of the timetabling, procedures and the use of a programme motion. It is open to us to adopt the amendment in the name of the noble Lord, Lord Campbell-Savours, thus making it possible for the other House to discuss the proposal, so let us do that.

Baroness Gould of Potternewton: My Lords, I rise with a little trepidation to put a slightly different point of view. I have great sympathy with the fact that this was not discussed in the House of Commons, and it should have been. It says an awful lot about the procedures of the House of Commons that 216 MPs can support an amendment and then it is decided not to take it. I can only say thank goodness we do not have procedures like that in the House of Lords. I genuinely hope—and I have said this to my noble friend—that there might be the possibility of some solution to this before we reach Third Reading. However if that is not possible, I shall vote with the Government.
	I will do so because the amendment is so badly flawed that I do not feel able to support it. It does not do what it is attempting to do. I have great sympathy with what it is attempting to achieve. I think it is diabolical that large sums can be spent prior to an election in the way that they have been in the past, but this amendment does not solve that problem. It does not solve the problem of a non-UK taxpayer putting money through companies or unincorporated associations. To prevent that would need another amendment, which we do not have in front of us. Nor does it do what I would like it to do, which is to say that large donations should not be spent before a general election from wherever they come. I can only cite from my own constituency, where one of the candidates spent £90,000 of his own money prior to the last general election. There is nothing in this amendment to stop that happening next time. I wish there was, but this amendment does not do what a lot of people believe it will do.

Lord Goodhart: My Lords, might the noble Baroness consider dealing with that point by supporting the amendment tabled by the noble Lord, Lord Campbell-Savours, and then supporting my noble friend's amendments to cap the contributions?

Baroness Gould of Potternewton: My Lords, I do not think the two things go together, with the greatest respect. We will come to the capping of donations later. The noble Lord does not know what my view is on that; he will have to wait and see. But this amendment does not do what a lot of people believe it does. I am not certain what the procedure would be to get an amendment which eliminated that loophole in respect of companies or unincorporated associations through the Commons if this amendment went back to the other place. I am not certain that it would be feasible.
	We have had some discussion already on the concerns the Government have raised in response to this amendment. One is the anomaly about democratic participation. It may be said that there is no relevance between giving money to a political party and affecting the outcome of an election. My constituency won irrespective of the £90,000 donation from another candidate. But I accept it has an effect. Also, if we say that a person cannot give a donation but can be a Member of this House or a candidate for the Commons and can win, does that not have an enormous influence on how taxpayers' money is spent? It is not just a question of how it is spent in elections, but also of how it is spent on all the other issues that we deal with. Those people have the right to sit in this place and the other place and spend that money. That is another flaw in the argument.
	I share the concern raised by the Electoral Commission about the need to verify whether a donation is permissible. The Electoral Commission's own data suggest that more than 1,000 individual donations would need verification annually. That would be an extraordinarily difficult job.
	My other real concern is about the implication for constituency parties. At present political parties can fulfil their compliance duty to check that an individual is on an electoral role, or a company is registered at Companies House, by consulting public records. Obliging parties to check the residence status of donors for tax purposes would be an impossible task and I am sure it is nowhere near as easy as putting a cross on the tax form. Tax records are not public documents and, in any event, there is no single record of individual tax status. I am not sure whether, even if a cross would satisfy it, it would be possible to use that cross because information would then be being disclosed about that person's tax. The consequence of that could be that a constituency party could find itself in difficulty and may end up having to repay the money. So there are many flaws in the argumentation. That is not to say that there is not a problem. Maybe there needs to be a wider discussion on the issue of tax status and participation in politics generally, but that is not a discussion for this Bill and this amendment does not achieve what it is intending to achieve.

Lord Anderson of Swansea: My Lords, my noble friend recognises that there is a problem and argues that the amendment does not wholly meet it. Of course that is true, but I agree with the noble Lord, Lord Tyler, who made the point that, even though this House should probably be reluctant to intervene in elections since we are a unelected House, this amendment gives the opportunity for the elected House to make its own decision, and this is what we should allow it to do.
	I can see no reason for the Government's rejection of this. The Government, in a rather civil-servant way, give 1,001 reasons why we should reject this, but do not come forward with any real reasons why this particular anomaly should not be met. The mischief which the noble Lord, Lord Campbell-Savours, seeks to meet is very clear; it is the mischief of the buying of elections by rich individuals who are not domiciled in this country. Quite properly the noble Lord, Lord Tyler, mentioned the good inverted US principle of no representation without taxation. Why should individuals have a disproportionate effect on our electoral process?
	I am thinking, for example, of a very competent colleague in the House of Commons, who lost his seat in 2005 and watched a tidal wave of money pour into his marginal seat from certain individuals in the years prior to the period when it was banned. He could do nothing about it. Clearly, only a relatively small number of marginal seats are laser-beamed in this way. This is not a partisan position. I hope the main Opposition also see the danger to our democracy of having elections bought in this way by very rich individuals. The awful thing for this individual was not that this tsunami of money poured into his constituency and overwhelmed him but that the money came from someone who was non-resident in this country. That is clearly the mischief that the noble Lord is seeking to meet.
	I simply ask this question of the Government: do they recognise that this is a problem at the very root of our democracy? Over the years, step by step, we have tried to remove the influence of money on elections and corrupt practices—mostly, I concede, thanks to the Liberal Party over the centuries—from the great Reform Act through to secret ballots, seeking to remove various forms of corrupt practice and the effect of money on elections, so that one individual does not have a greater say in the determination of an election result than other, ordinary folk. Why can we not seek some means of doing it? It is not good enough simply to parade a series of individual objections to the points raised. Why will the Government not do something about it? And is the Conservative Party content to allow this possibility to pervert our democracy without accepting what is here and giving the House of Commons—the elected House—the opportunity to debate it and put it right if it is able to do so?

Lord Neill of Bladen: My Lords, there are two debates going on. The first is whether the amendment is in substance correct, whatever nitpicking one can indulge in. The other is that we have a duty to give the other place a chance to vote on this issue. If I may take the liberty of pretending to be a member of the public, if asked, as a man in the street, whether I would approve of a wealthy foreigner—not even a member of the EU—paying a huge sum of money to one political party in the run-up to a general election, and it being acceptable under the rules for influence to be wielded in that way, the only possible answer would be, "What an absolutely outrageous suggestion—of course not. Surely that's not allowed". One would have to say, "Well, as a matter of fact, it is at the moment. We are talking about an amendment to stop it being possible". I am sorry to fantasise, but I believe this is how people would react: "Well, I am all with it".
	On the second issue, we now want to give the other place—we call it the House of Commons out in the street—a chance to vote on this portion of the Bill. The man in the street might say, "I thought this Bill came to you from the House of Commons. It must have thought about this". One's response would be, "No, I'm afraid I have to enlighten you on that point. It often does not consider very important parts—sometimes great chunks—of an Act of Parliament. The House never had the opportunity to debate this proposal. We are not suggesting chicanery. It somehow came out through the machinery; there was no chance of debate". My ideal man in the street would say, "That is ridiculous. Give them a chance".

Lord Lea of Crondall: My Lords, it is probably incumbent on members of the Labour group who are inclined to support the amendment to explain themselves very briefly.
	At a time of constitutional renewal, and with the absurdity of the overuse of the guillotine in the House of Commons, there is a very powerful argument here. To put a shot across the bows of those who talk about constitutional change without having any way of meeting it—the noble Lord, Lord Tyler, produced a Bill on this earlier, and it seems to have been debated for a long time—I am very interested in and sympathetic to the premise with which my noble friend Lady Gould, who has enormous experience in this field, began.
	I also agree that the amendment does not do certain other things that may or may not logically be part of a jigsaw puzzle. Equally, I pick up the point that something needs to be done and that, if this amendment is carried, the Government must realise that they will have to put their brain to this with more urgency, so that when it gets back to the House of Commons—I doubt that that will be by Third Reading, but it may be—unless the procedures of the House of Commons are even more incomprehensible to Members of this House, the mysterious authorities there cannot simply say for the second time: "No, we are not going to take the amendment".

Lord Oakeshott of Seagrove Bay: My Lords, briefly, I support this amendment and the excellent speeches made by the noble Lord, Lord Campbell-Savours, and my noble friend Lord Tyler. The speeches were in support of the amendment, with the sole exception of the noble Baroness, Lady Gould. She made two points. First, she broadly agrees with the amendment but thinks that it does not go far enough. That is no reason to oppose it. Her practical point was that it would be very difficult for parties to check whether donations met this test. I do not think, off the top of my head, that it would be difficult. All one would need would be a requirement that any person making a donation signed a form to say that they were wholly resident or domiciled in this country for tax purposes, that a donation could not be accepted if that were not so, and that it would be a criminal offence to accept a donation without that form and a criminal offence to sign it if that were not true. It would be very easy indeed for the Electoral Commission to check with the tax authorities whether any person had signed the form wrongly. I cannot see that that is a problem. I see that the noble Lord, Lord Myners, is here. I know that he is very sympathetic to the drift of all this, and I am sure he will quickly tell me if I have not got this quite right. The noble Baroness, Lady Gould, is looking for problems where they do not exist.

Baroness Gould of Potternewton: My Lords, I am sorry to intervene. The noble Lord has talked about individuals, which seems fine. That seems to be a very easy solution to the problem. However, the donations do not come from the individual directly; they come indirectly. How would he solve that particular problem?

Lord Oakeshott of Seagrove Bay: My Lords, this is what I mean when I say that we should not accept any donations from companies at all. That is the solution to that one.
	My Bill, which is currently in Committee, requires that no one who is not ordinarily resident or domiciled in this country shall sit in this House. The Government say that they are very sympathetic to that. I am very glad for that sympathy, and I hope that it will soon be converted into practical action. However, the amendment before us today is arguably even more important than my own Bill. It is outrageous that non-resident Peers can sit and vote on our laws in this House, but it is even more outrageous that a person who does not pay full British tax can pay millions to a political party—money that is, in effect, filched from the British taxpayer by that person because he is not resident here and does not pay tax but can influence millions of votes. If the Government believe that this is wrong and must be stopped, why will they not accept the noble Lord's amendment? If they say—as to some extent they have been saying, although I hope that has changed—that my Bill is the wrong way of dealing with the abuse of non-resident Peers sitting in the House, what is the right way of dealing with the abuse of donations that we all accept is happening? Why will the Government not act while they still have the power to do so? We are at the eleventh hour.

Lord Rooker: My Lords, I did not intend to speak, but I must say that I wholly support the amendment in the name of my noble friend Lord Campbell-Savours. I have two brief points to make.
	In June 1997 in a committee in the other place, my late colleague Audrey Wise and I tabled amendments to the Finance Bill. As well as being told that the amendments were inconvenient, we were told that they were in the wrong place in the Bill and were technically deficient—all those reasons. Our view was: "Make them okay. Put them in the right place in the Bill". That is what the Government did, but they would not have done so if we had not tabled the amendments. I must say to your Lordships, although I would not dare to give examples, that on several occasions at the Dispatch Box in recent years I have moved government amendments or agreed to amendments to government Bills from noble Lords around the House that were not perfectly drafted. Our view was that we needed them so that the draftsmen in the other place could get to work to achieve our objective. That is done every day of the week. That is what parliamentary counsel is for.
	The general view among the population now is that we have banned donations from foreigners. Morally, you cannot argue that case if you allow the status quo on the taxation argument; the noble Lord, Lord Neill, made that point. If the amendment had not been on the amendment paper in the House of Commons, it would be quite wrong for us to try to put it in from here. The fact that it was on the amendment paper but not debated means that it was still part of the Bill's proceedings.
	Generally speaking, if anyone outside this place asks us what we do, one of the key answers that we give is that we ask the House of Commons to think again. It will not think again unless the issue is on the amendment paper, and we can get it on to the amendment paper only if my noble friend's amendment is accepted. I shall vote for it.

Lord Warner: My Lords, briefly, I support all those who have spoken in favour of the amendment in the name of my noble friend Lord Campbell-Savours. I have one very simple point to make. Over the past few months, we have heard from all the leaders of the political parties their undying commitment to cleaning up politics. If we collude in supporting this Bill without an amendment of the kind which my noble friend has moved, we are colluding in not cleaning up politics. We should support the amendment.

Lord Bates: My Lords, this has been a debate of outstanding quality. I am new to your Lordships' House, and it is incredibly impressive to hear such skilled speeches and debates about the detail of this legislation. I shall touch on a few of those points without detracting from the outstanding experience that is present in this House and which I do not possess.
	In moving his amendment, the noble Lord, Lord Campbell-Savours, touched on a point with which we certainly agree: the procedural way in which matters are conducted down the other end of the Palace of Westminster—the over-frequent use of the guillotine and the stifling of debate—leaves much to be desired. That is not the case here. This amendment was moved in Grand Committee, again very ably. It sparked a debate that went on for an hour. During that time, the Minister gave a detailed, almost line-by-line, rebuttal of the reasons why the amendment would not work in the way that it was proposed. I found that argument quite persuasive.
	There is a need, which has been articulated by my right honourable friend David Cameron on a number of occasions, to remove big money from British politics. That desire is there and all parties of the House need to agree on how it should move forward. Hayden Phillips had almost reached that point before, sadly, the Government abandoned that pledge. Therefore, we are left with the difficulties before us. Very detailed restrictions are put on people who want to donate to political parties in this House. They have to be registered or be on the electoral register. The money has to come from a UK-registered corporation. In both those respects, it could be argued that there is some level of interest; namely, that either the person is resident and is on a register or that they are part of our economy and paying through a company which is registered here.
	We also need to bear in mind that context is important as regards the notion and the language of buying elections. I can understand why people use that sense of hyperbole—

Lord Sewel: My Lords, I am grateful to the noble Lord for giving way. I accept that he is making a very balanced speech. But does he not accept that there is a core argument in your Lordships' House, which addresses the role of an upper House, a revising and scrutinising House? The argument is that on a matter of significant interest, particularly if it affects how we carry out our politics, it is appropriate for this House to give the opportunity to the other House to make a determination on an issue of fundamental importance that it has not so far had the opportunity to decide.

Lord Bates: My Lords, I follow the noble Lord's argument. There is a sense in which it could be argued that the other place had an opportunity when Mr Gordon Prentice presented those Bills. The fact that that opportunity was denied by the business managers in the Commons is regrettable and we are redressing it by having a more reasoned debate in this place. I do not doubt that. Because they have behaved in a certain way once, the argument is to pass it back to see whether they will behave in the same way again. I am not entirely persuaded of that because of another point, which was touched on by the noble Baroness, Lady Gould, who pointed to some of the difficulties. On the way through this Bill and the legislation, we have talked about the difficulty of too onerous a requirement being placed on volunteers within associations who could potentially make innocent mistakes, and the boundaries of knowledge.
	Certainly, it is possible to check whether a company is registered in the UK for tax purposes and to check the electoral register to see whether an individual is on that register. It is not possible for the average person to scrutinise tax records, which are private, in order to ascertain whether that is not the case. The solution is that there should be voluntary disclosure. In Committee, the Minister's response pointed to some of the difficulties which that can land one in, because tax status is determined retrospectively. Tax returns are filled in at the end of a year. A register of electors is for the year ahead. In terms of those types of arguments, there is something to be considered.
	In addition, we are roping into funding and taxation the whole issue of residence and domicile for tax purposes. I am no tax specialist, but many learned Members seem to make a very handsome living out of determining who is and is not resident and domiciled for tax purposes. It may not be as clear cut as one might suggest as far as this proposal is concerned. Those big money elements of politics also need to caution people. Before the intervention, I referred to hyperbole and the buying of seats and the buying of elections. Big money has been around in politics for a long time. If I feel slightly saintly on this, it is because I spent a glorious weekend walking around the grounds of the Earl Grey's house, Howick Hall in Northumberland. I feel at least some moral element of authority. In that respect, we are talking about nothing of that here.
	Especially in the days of the media, elections are won and lost by the veracity of the arguments and the compelling nature of the case put forward. If my party happens to be doing better in the elections at this time, it is because of the positive alternative offered by David Cameron to this country, which is put forward by the party. The electorate is capable of making those independent judgments. To minimise them or to use inappropriate language to question whether they are capable of making that judgment is perhaps unfair at these times.
	In conclusion, the matter has been aired and discussed. In Committee, the Minister gave a vigorous defence of the reasons why this is difficult to bring about from a legal point of view. We on this side of the House look forward to the day when big money is genuinely taken out of politics and those cross-party agreements—

Noble Lords: Oh!

Lord Bates: My Lords, that is genuinely the case. The Liberal Democrat Benches laugh at this, although their idea is that big money should not come from trade unions or businesses, but from the taxpayer. They want public money to fund their coffers. They want big money that is public money. That is unacceptable to the British public who are facing many pressures on public services and would not choose to fund political parties at this time. With those comments, we await the Minister's rebuttal on these matters and we will support him in that.

Lord Bach: My Lords, Amendments 29 and 30 would add to the permissibility requirements relating to donations from individuals. In addition to the existing requirement that an individual be registered in an electoral register, Amendment 29 would provide that an individual would have to be resident in the United Kingdom for the purposes of the Income Tax Act 2007 and would have to not be a non-domiciled United Kingdom resident. Amendment 30 would amend proposed new Section 54A of the 2000 Act by requiring any declaration by an individual donor as to the source of a donation to state that he satisfies these additional requirements. I agree with the noble Lord, Lord Bates, that this has been an outstanding debate and I thank all noble Lords who have spoken.
	As the House knows, these amendments were originally debated at some length in Grand Committee. The Government have listened carefully to the points that were made then and have been put again today, but I must inform the House that the Government continue to have serious concerns about these amendments on principled, practical and legal grounds. I want to reiterate these concerns and I apologise in advance if it takes a little time. I hope to address additional points raised in Grand Committee and in today's debate.
	As we have said before, the Government recognise and understand the sentiment behind the amendments, which is that those who donate to political parties in this country should pay tax in this country. We also recognise, however, that making a donation is just one way in which an individual can participate in our democracy. There are many other ways, ranging from exercising the right to vote to standing as a candidate for the House of Commons and sitting in a legislature as we are tonight in the House of Lords. We believe that there is a spectrum of political involvement from voting at one end to sitting in the legislature at the other, with large political donations somewhere in-between.
	The Government have stated their firm belief that it would be wrong in principle to create an anomaly by introducing extra restrictions on only one form of participation without considering whether equivalent restrictions should be placed on other forms of participation. We believe that the issue of what should be the correct relationship between an individual's taxation status and their right to civic and democratic participation needs to be looked at as a whole. I can tell the House tonight that this will be one of the issues that will be covered by the democratic renewal council in its deliberations, which are taking place now, on the wider constitutional reform agenda. I can give that commitment to the House this evening that it will be part of its brief to look at this issue as a whole.
	Notwithstanding this objection of principle, significant legal and practical difficulties must be given detailed consideration before any restriction on donations relating to tax status could be introduced. I am afraid that we are of the view that the amendments fail to deal adequately with these difficulties. As a result, they risk introducing a new restriction which could not be effectively enforced and which could be open to legal challenge. Moreover, the amendments—and this is a crucial point, in our view—would not achieve their intended objective, since non-UK taxpayers could continue to have a role in funding political parties and other political entities through companies and unincorporated associations. For this combination of reasons, we are duty-bound, we feel, to resist these amendments.
	If carried and enacted, there is a risk—I choose my words carefully—that the amendments would interfere with Article 10, Article 11 or Article 3 of Protocol 1 of the European Convention on Human Rights.

Lord Goodhart: My Lords, will all respect to the Minister, that seems to be a highly improbable interpretation of Articles 10 and 11 and Article 3 of the Protocol. Is there any authority that binds the Government not to accept legislation of the kind covered by this amendment?

Lord Bach: My Lords, will the noble Lord just hear my argument on this, which I hope will deal with the point that he raises? Those articles are the right to freedom of expression, the right to freedom of assembly and association and the right to free elections. The articles might be engaged by limitations on the making of donations and any steps taken in this area would need careful legal consideration—I do not go further than that—in order to ensure that the proposal was compatible with the relevant convention rights. We do not say that it would breach them; we say that, if we do not consider imposing the restriction alongside the other restrictions—those on voting or being able to stand for Parliament—the risk of breach is, we believe, on advice, greater, because of the anomaly that it creates, for which there would be no obvious justification. This strengthens the argument for wider consideration of the whole matter, as we propose. I concede that the legal position is difficult and needs very careful consideration. If we are going to do something like this, we need to get it right. Without wider consideration, we genuinely risk not getting it correct.

Lord Maclennan of Rogart: My Lords, is it seriously the Government's intention to suggest that the European Convention on Human Rights would restrict the prevention of an election from being bought by people who are not even resident in the European Union? The Minister has not answered in one respect my noble friend's inquiry as to whether there is any legal justification or legal precedent for the astonishing assertions that he has made.

Lord Bach: My Lords, the advice that the Government have received on this issue is, I repeat, that there is a risk that we would be held in breach. I cannot do more than that; the noble Lord can make up his own mind.

Lord Anderson of Swansea: My Lords, I have a simple question. Was that advice based on any authority?

Lord Bach: My Lords, I am not in a position to be able to answer that.

Noble Lords: Oh!

Lord Bach: My Lords, noble Lords laugh, but that is a little unfair. The advice that we have received from our officials and that I mention to the House in as moderate and as cautious a way as I can is that there is a risk. If I was advised that there was no risk, I would not say that there was a risk. If we are told that there is a risk, I think that I am duty-bound to tell the House that, even if I have to do it through the laughter of noble Lords.
	If we are to focus only on donations, as the amendments propose, rather than on the full range of democratic participation, we think that concern would be heightened because, for a restriction of this type to be lawful, it has to be justified and proportionate in the interests of a democratic society. Focusing only on donations, as this amendment does, begs a question when assessing the compatibility of the proposal with ECHR rights. Why place a restriction on donations in this way now, but not on other forms of participation, on the grounds of tax status? There may be no easy answer to that question, especially if we have not considered, at the same time, whether it would be justified and proportionate to impose similar restrictions on other rights as well as this one, or, indeed, instead of it. We see that a wider review of the range of possible restrictions is essential in order to ensure that the approach taken here is lawful and proper. Without it, the risk of a finding that the proposal is incompatible with the ECHR is increased. This sort of review is exactly what we propose and the position of the lawfulness of this sort of restriction will be much clearer for it. A review such as this, however, is a major piece of work and is not possible within the timescale to which this Bill is working.
	Finally, we must not forget that the effects of these amendments would, in some cases, be to restrict the rights of UK citizens to participate in the democratic system. This will add extra difficulty. Any proposal that seeks to link an individual's taxation status to their ability to donate would require clear information on the taxation status of all potential donors to be readily available. That information would need to be accessible to political parties and the Electoral Commission for the purposes of checking whether a donation was permitted. There are obvious and serious concerns about data protection.
	Her Majesty's Revenue and Customs is the body that can establish whether an individual is resident and domiciled in the UK for tax purposes. However, as this information is relevant only to the tax liabilities of certain people with non-UK income, it does not routinely hold this information for all taxpayers. Even for those individuals who self-assess their residency or domicile status, this information is not in an easily accessible, retrievable or list-based form.
	Of course, HMRC can, where necessary, undertake an investigation to establish the residence and domicile status of any particular individual. Such investigations can involve considerable time and expense and are made on the basis of a risk assessment. To conduct an investigation into every individual who makes a political donation would require an investigation into an individual's status at a given point. This would be a very significant undertaking and would need to be based on facts that would require additional information gathering. An individual's tax residence status can change from year to year and is, effectively, retrospective, as it is often based, among other criteria, on the amount of time that an individual has spent in the UK in the previous 12 months. Uncomfortable though it may be to hear, it could be very difficult to establish at a given point in the middle of a tax year whether an individual was or was likely to be regarded as resident at the end of that year.
	An individual's domicile status is separate from his residence status. Domicile is a common-law concept relating to the country that a person thinks of as home. This is composed of a number of factors, such as the birth country of the father and the country with which a person feels that they have the most ties. It is not always straightforward for an individual to determine their domicile status. Many individuals are unlikely even to be aware of their domicile status, since it is irrelevant to their tax affairs, and they could therefore unwittingly commit an offence by making a donation that would be impermissible under these amendments.
	It is quite possible for someone to live in the UK for a number of years without acquiring UK domicile. For example, an Australian might live in the UK for 20 or more years but have family in Australia and intend returning to Australia on retirement. Despite the fact that this person was paying full UK tax on all earnings, their domicile could still be in Australia, meaning that, under these amendments, it would be an offence for them to give a political donation. I would be grateful if my noble friend would deal with that example in his reply and explain to the House why the amendments in his name would not lead to that completely unfair result for that individual.
	Even if Her Majesty's Revenue and Customs were able easily to establish the taxation status of all donors, questions would remain as to how the requirement in the amendments could be enforced. Recipients of donations and the Electoral Commission would face great difficulty in verifying whether what a donor told them about their taxation status was accurate. As the House will know, the 2000 Act requires a donee to verify that a donation is permissible before accepting it. Requiring donees to be certain that a donation is from an individual who is both resident and domiciled in the UK for tax purposes would be a significant obligation that the House should be careful about imposing. The obligation could result in a reduction in the income of political parties.
	Realistically, the obligation could be satisfied only if parties and the commission were granted access to the information held by HMRC, either routinely or on a more limited basis. HMRC has a statutory duty under Section 18 of the Commissioners for Revenue and Customs Act 2005 to maintain taxpayer confidentiality. I hardly need say that the data-sharing and confidentiality implications of granting an exception in the case of all donors are, whether we like it or not, significant and would need to be thought through very carefully.
	I note once again that the Electoral Commission has expressed concerns about the workability of these proposals and their impact on political parties and other regulated entities in its briefing notes in advance of Committee and Report. On workability, the commission noted:
	"In many cases it may be difficult for the recipient of a donation to verify whether the donor is a resident in the UK for taxation purposes and not a non-domiciled UK resident. Further, Parliament may wish to consider the administrative implications for HMRC should the amendment be agreed. Commission data suggests that more than 1,000 individual donations would need verification annually".
	Commenting on the impact on parties, the commission said:
	"In order to assess whether any donation from an individual is permissible, the recipient would need access to authoritative information about that individual's tax status. The Commission would also need access to that information to confirm compliance. We think it highly unlikely that this will be achievable in practice, or (if so) that the resulting burden on regulated entities and on HM Revenue and Customs would be proportionate".
	When we considered this point in Grand Committee and, of course, tonight, my noble friend Lord Campbell-Savours and others suggested a number of ways in which they thought that this problem might be addressed. My noble friend suggested that tax returns could include a tick-box for donors to indicate their taxation status and that the Electoral Commission could then certify with HMRC that a ticked return had been received.
	I have to advise noble Lords that tax returns already allow for people to declare whether they are resident and/or domiciled. However, most people are not required to complete a tax return at all. About 9 million people complete a return each year out of a UK population of 60 million—that is about 15 per cent. I remind the House that you have to make a return only if, first, Her Majesty's Revenue and Customs sends you one or, secondly, if you have tax to pay and it has not sent you one. A vast majority of people pay the right amount of tax under PAYE or because tax is deducted at source, as with bank interest, so there is no tax to pay and no return needed. Fifty-one million people in the UK do not make a return each year; 9 million people do. Thus, for my noble friend's suggested solution to work and to ensure that all donors had declared their residence status via a tax return, Her Majesty's Revenue and Customs would have to issue many more tax returns for non-tax reasons. That would involve significant additional public expenditure, including potentially, we have been advised, the need to overhaul IT systems to enable them to cope with the routine of tax returns.

Lord Goodhart: My Lords, is the Minister suggesting that any of the people who pay solely through PAYE are likely to make a massive donation to a political party?

Lord Bach: My Lords, I am explaining that a very large number of people do not fill in tax returns, but there may well be people who, as in the Australian example that I gave to the noble Lord, are not domiciled in the country but pay UK tax through PAYE and have done for many years. That would mean that HMRC would have to change the way in which it did things at large public expense and with new IT if the amendments were to be carried and became law.
	Requiring donors to tick a box on their return would not overcome the retrospection objection to which I have referred. People are required to complete a return 10 months after the end of a tax year. If an individual makes a donation in the middle of one tax year, it might not be reasonable to expect them to know at that point what their residence status would be by the end of the year. Even if this information were collected, it would, as things stand, be illegal for HMRC to share it with the Electoral Commission.
	The noble Lord, Lord Tyler, noted tonight as well as in Grand Committee that the House of Lords Appointments Commission announced recently that it would strengthen the existing criteria requiring that nominees should be resident in the UK for taxation purposes. He argued that this process sets a precedent that could be used to confirm the permissibility of donors. However, the number of people seeking membership of your Lordships' House is far smaller than the number who make donations to political parties. As we have heard, Electoral Commission data suggest that more than 1,000 individual donations would need verification annually. By contrast, fewer than 10 people are appointed to this House annually on the recommendations of the Appointments Commission.
	Indeed, the relationship between the Appointments Commission and HMRC is not a formal gateway for sharing information. HMRC simply informs the commission whether an individual meets all the criteria. These criteria include residence, but also whether there is an indication of any tax irregularities such as an investigation being under way. It is important to note that HMRC's response does not go into detail other than to give a yes or no response to the query as to whether there are any issues of concern in an individual's tax records.

Lord Lea of Crondall: My Lords, I must have misunderstood what the Minister said, and I would be grateful if he would clarify it. The Appointments Commission, as we all know, is not yet subject to the Bill of the noble Lord, Lord Steel, which stipulates a statutory appointments commission, and deals in effect only with Cross-Benchers. Am I right that these Cross-Benchers are the people we are talking about?

Lord Bach: My Lords, indeed not. It was suggested that the House of Lords Appointments Commission's method of proceeding was a way that Her Majesty's Revenue and Customs could proceed. However, the numbers are vastly different—that is the point at issue. There are very few people each year who apply to join the House of Lords compared to the large number of people who make donations to political parties, so it would not be an easy job for Her Majesty's Revenue and Customs to supply answers, whereas it is comparatively easy for it to do so for those who apply to join the House.

Lord Tyler: My Lords, is the Minister saying that, in principle, it is perfectly possible, and that it is just the numbers that are the problem?

Lord Bach: My Lords, in principle almost anything is perfectly possible. Those of us here whose job it is to pass legislation that will work in the real world have to look beyond that to see whether what we are suggesting is realistic. My point is that, while in principle it might be possible, it would require huge amounts of public money and huge changes to the way HMRC works before it could be put into operation. I hope that that is a powerful point in suggesting that these amendments, attractive as clearly they are to a number of Members of the House, are unrealistic and cannot work.
	I will come to a conclusion. I apologise for going on—

Noble Lords: Ha!

Lord Bach: Well, it is important that the Government case is put, my Lords, particularly as this is a matter of some controversy in the House. I am sorry if noble Lords are becoming slightly impatient. As I have said, we understand completely the argument that my noble friend makes so well in raising the issue again through these amendments. I hope that he and other noble Lords have no doubt that the Government take the concerns seriously. We are continuing to reflect on how the issue might be taken forward. As I have said, the new democratic renewal council will have the issue on its agenda—but as a whole, not in part. These are complex issues—I do not think that any noble Lord would disagree—that must be considered in detail before any change in this area can be made. Failure to do so would leave us with flawed and unworkable law. It is all very well for us to talk about our scrutiny role, but that is to make sure that laws are not flawed or unworkable. Our strong view is that if we pass the amendment, we would be left in that position.
	Noble Lords will be aware that the issues of constitutional change and renewal are at the top of our political agenda. Many options for reform are being considered and discussed. The amendments before us, and the debate that we have had today, which I have praised already, are an important part of that discussion. However, the Government's point is that it would be wrong to make change in only one small area now, as the amendment seeks to do, without considering the whole picture. It would be wrong to pass legislation that would not achieve its objective. It would be particularly wrong to do so before the logistics and data-sharing issues around such a proposal have been fully worked through. That is a major project, and realistically not one that can be completed between now and the Summer Recess, which we hope is the deadline for the Bill to obtain Royal Assent.
	Of course I ask my noble friend to withdraw his amendment. If he feels that he cannot, I ask my noble friends and other noble Lords to support the Government in the Lobby tonight.

Lord Campbell-Savours: My Lords, my noble friend had very little to say about the position of the House of Commons—many of us will wonder why. The hour is late, everyone is waiting to vote and there are many things that I would like to say in response to my noble friend's contribution. What I will recall from this debate is his likening of the casting of a single vote to the contribution of millions of pounds to a political party. They cannot be the same, yet the Government's case seems to rest on that proposition, along with all the administrative difficulties that they say will arise in the event that the amendment is carried.
	I simply dispute their case. We took widely available advice on the question of what the impact would be on the department. The arguments that my noble friend has used this evening are new in that area alone. All the other arguments that he used are in response to questions, and are arguments that I used in my own contribution and answered quite comprehensively. I am indebted to the noble Lords, Lord Tyler, Lord Borrie, Lord Williamson, Lord Anderson, Lord Lea of Crondall, Lord Oakeshott, Lord Rooker and Lord Warner, and to the noble Baroness, Lady Gould of Potternewton, for their contributions. In particular, I would like us to reflect on the words of the noble Lord, Lord Neill. He questioned what the public—the man in the street—would say if asked what he expected of Parliament. In his view, my view and, I believe, the view of the great British public, this should be sorted out now. This is our only opportunity and I call upon my noble friends to join me in the Division Lobby to test the view of the House.

Division on Amendment 29
	Contents 107; Not-Contents 85.
	Amendment 29 agreed.

Amendment 30
	 Moved by Lord Campbell-Savours
	30: Clause 8, page 7, line 37, at end insert—
	"(3A) A declaration under this section must also state that the person P is resident in the United Kingdom for the purposes of Part 14 of the Income Tax Act 2007 and is not a non-domiciled United Kingdom resident."
	Amendment 30 agreed.
	Consideration on Report adjourned until not before 9.28 pm.

Legislative Reform (Minor Variations to Premises Licences and Club Premises Certificates) Order 2009

Copy of the Order
	7th Report from the Regulatory Reform Committee

Motion to Approve

Moved By Lord Carter of Barnes
	That the draft Legislative Reform Order laid before the House on 26 March be approved.
	Relevant Document:7th Report from the Regulatory Reform Committee

Lord Carter of Barnes: My Lords, the measure before you is part of the Government's programme to remove unnecessary burdens on business. The minor variations process will provide an easier, cheaper and quicker way for premises to make small changes to their licences. This is particularly relevant at a time when pubs and clubs are struggling to survive. It will save the licensed trade valuable time and money and benefit thousands of voluntary bodies, such as sports clubs, political clubs and village halls, which wish to make small changes to their licences.
	A licence holder who wants to change any aspect of their licence must complete a 16-page application form, copy the application to around eight responsible authorities, advertise the variation in the local newspaper at an average cost of £200, post a notice outside the premises and pay the local authority a fee, which can range between £100 and £2,000. If local residents and businesses have concerns about the proposed change, the local authority must hold a hearing to consider the evidence and decide whether the variation should indeed go ahead. This process can last up to two months and costs on average about £600 per application.
	In the Government's view, it is absolutely right that these safeguards should be in place for variations that might affect the licensing objectives. However, the full variation process is disproportionate and burdensome for a small, low-risk, low-impact change to a licence. This might be, for example, relocating a bar, removing an out-of-date condition or holding an event once a week. Since the Act first came into force, a wide range of stakeholders including local authorities, licence holders, and live music organisations, have been asking for a cheaper, fast-track process for these minor variations. The proposal before you today is the Government's response.
	How exactly will the minor variations process work? Licence holders will make an application to the licensing authority in the normal way but, unlike the full variation process applicants, they will not be required to copy the application to responsible authorities or advertise it in a local newspaper. The form will be shorter and easier to complete. Applications will be decided in 15 days with no hearings or appeals and applicants will pay a flat rate fee.
	While we believe that this process is a significant change, it does contain important safeguards and protections. First, applications will be refused if they could have any adverse impact on the licensing objectives, which include the prevention of crime and disorder, public safety, the prevention of public nuisance and the protection of children from harm. Licensing officers will decide if applications meet this basic test, consulting responsible authorities like the police as necessary.
	Secondly, the minor variation process cannot be used to add the sale of alcohol to a licence, to extend the hours during which alcohol is sold and allow the sale of alcohol between 11 pm and 7am. This is very resonant with the findings of the first public consultation document on this exercise.
	Thirdly, the applicant must post brief details of the proposed variation on the premises so that residents know about the application and can tell the council if they have concerns. The local authority must take residents' views into account in reaching a decision but it is not required to hold a hearing. These safeguards should ensure that only genuinely minor variations are allowed through this simplified process. If, exceptionally, there are any subsequent problems at a premise, local residents can ask for an immediate review of the licence.
	In summary, the order before you today will cut red tape, reduce bureaucracy and save licence holders significant sums of money. It will help a wide range of businesses and voluntary organisations in these difficult economic times. However, it will have appropriate safeguards on the impact of risk to residents and the public. I beg to move that this House approves the order.
	Amendment to the Motion
	 Moved by Lord Clement-Jones
	at end to insert "but that this House regrets the Government's decision to proceed with the draft Legislative Reform Order before section 177 of the Licensing Act 2003 has been amended to provide for an effective exemption of some performances of live music in certain small premises".

Lord Clement-Jones: My Lords, I am sure that the Minister will be only too well aware of the interest taken on these benches in the future of live music. Consistently, my noble friend Lord Redesdale, who I am delighted to see here today, during the passage of the Licensing Act 2003, and subsequently myself, have argued that ensuring the ability of musicians to play music live in small venues, untrammelled by too much red tape at best and the full weight of the criminal law at worst, is vital.
	At the time of its passage, Ministers were confident of the likely impact of the Act. The noble Lord, Lord McIntosh of Haringey, the then DCMS spokesperson in the House of Lords, told this House on 26 November 2002:
	"My view is that there will be an explosion of live music as a result of removing the discriminatory two-in-a-bar provision".—[Official Report, 26/11/02; col. 736.]
	On 3 July 2003, the noble Lord said in this House:
	"I would be astonished if there were not a significant increase in the proportion of pubs putting on live music as a result of this Bill".—[Official Report, 03/06/03; col. 1061.]
	However, the Licensing Act has not delivered an increase in live music, despite these promises. Back in 2007, the Live Music Forum, which had been set up in 2004 by the then Minister, now the noble Baroness, Lady Morris of Yardley, to advise on the impact of the Licensing Act on live music, published a report that confirmed that neither an explosion nor even a significant increase had taken place, and that there were numerous occasions on which local authorities had adopted widely varying interpretations of the key elements of the Act. It turned out that the complexity of the process involved and the impenetrability of the wording of Section 177 of the Act—which was held up during the passage of the then Licensing Bill as a great concession for live music in small pub and restaurant venues—had led to the forum being unable to find a single example where Section 177 was used by licensing officers or venue owners. So the forum recommended new exemptions for small gigs as a matter of some urgency.
	The Live Music Forum's report was followed by a BRMB survey commissioned by the DCMS. This confirmed that live music in smaller venues had shrunk by 5 per cent overall. In restaurants and cafes, the figure was a drop of 12 per cent; and in church halls and community centres it was 24 per cent. As a result, the then Secretary of State, James Purnell, pledged to explore exemptions for some venues.
	I was struck by what the noble Lord, Lord Colwyn, said in a recent debate in the House, which backs that up:
	"This restrictive legislation has had serious implications for jazz. It has removed hundreds of venues where young musicians can perform and learn to play to an audience".—[Official Report, 4/6/09; col. 316.]
	In 2007, 2008 and 2009, the noble Lord, Lord Davies of Oldham, on several occasions—notably in the debate on the guidance under the Act in October 2007 and in reply to subsequent Written Questions—has given categorical assurances that amendments to the Act, designed to exempt low-impact or de minimis licensable activities, including live music, were being considered. Discussions with interested parties were happening and formal consultations would take place. Last May, the noble Lord, Lord Davies, said that consultations would take place "by the summer". Last July, he said that they would take place, "by the autumn". Disappointingly, despite the passage of time, nothing at all has emerged. Indeed, the DCMS appears to be back-tracking. In the latest reply to a Written Question, the DCMS,
	"continues to consider how best to encourage live music".—[Official Report, 20/4/09; col. WA351.]
	"We shall consult," they say, but there is no longer any timing promised at all.
	Most recently, however, and encouragingly, the House of Commons Culture, Media and Sport Select Committee report into the Licensing Act has accepted the case that something needs to be done to encourage more live music in smaller venues. It describes the licensing laws as absurd in this respect. It recommends, first, the exemption of small venues with a capacity of 200 people or fewer and, secondly, the reintroduction of the two-in-a-bar rule for non-amplified music. As the chairman, Sir John Whittingdale, rightly said,
	"Young musicians often get their first break through performing live at small venues".
	The purpose of today's amendment to the Motion is, yet again, to attempt to flush out the Minister's and the DCMS's intentions. Is there any settled view within the DCMS as to what amendments are desirable and possible? With whom has it had discussions beyond the MU, UK Music and the LGA? Will the consultation paper be forthcoming and the consultation be started? If so, when?
	There is no doubt that today's minor variations order is inadequate and will not deliver what we on these Benches, the Select Committee and UK Music want to see. Minor variations to an existing licence are no substitute for a new small-venues exemption under the Act. The Department for Culture, Media and Sport itself, in its evidence to the Regulatory Reform Committee included in the committee's second report, has warned that many live music applications would not qualify as a minor variation. Licensing experts have already criticised the amendment as being of limited value. The DCMS said:
	"In many cases the extension of music and dancing beyond 11pm, or the addition of the playing of music to a licence, will not fall within the definition of a minor variation".
	In fact, the minor variations procedure has become considerably more complicated as a result of the Regulatory Reform Committee's own views on the previous draft order, published last December. As a result, the DCMS laid a revised order. Key changes have been made: first, to require applicants to advertise proposed minor variations on a white notice outside the premises for 10 working days; secondly, to give local residents and businesses the right to make representations in writing to the local authority; and, thirdly, to require the local authority to consider any such representations received within the 10-day period in arriving at its decision. The Licensing Advisory Group has expressed disappointment as reported in the Explanatory Memorandum to the order in the following terms:
	"All members were disappointed that the original proposal had been diluted and felt that this would render the process less attractive to applicants with a consequent reduction in take up by licensees and therefore in cost savings".
	The order has been criticised more heavily by expert commentators. This from a leading licensing lawyer:
	"It is likely that the current 'minor variations procedure' adopted by many licensing authorities, simply because the Government hadn't proposed one, will now become a thing of the past. It is therefore arguable that the new procedure will make the licensing process even more cumbersome than it was before".
	Another expert writing in the Morning Advertiser in April this year said:
	"What started off as a helpful gesture by the Department for Culture Media & Sport (DCMS) to overcome the elaborate procedure for varying a licence has turned into a pedantic nightmare ... We had a simple form of minor variations procedure under the old law, with the licensing justices giving instant decisions, and it worked pretty well. Residents were not prejudiced, but it gave operators the opportunity to alter their premises, usually for the better".
	In any event, the order will not benefit the thousands of events in venues that are not already licensed under the Act.
	The Government have brought forward this mouse of a regulation when they should by now have been consulting energetically on a new exemption for live music in small venues as they promised. The absurdities of the Act generally in respect of live music are manifest. The interpretation of the Licensing Act varies widely from local authority to local authority, with some taking a lenient view of incidental music and others a much more restrictive approach. The guidance, as I foresaw in 2007, definitely needs changing to ensure consistency.
	We even have the ridiculous situation where the former Secretary of State Andy Burnham—I have talked about a lot former Secretaries of State—recently went to the Knotty Ash Youth & Community Centre to hear performances of live music on the centre's launch as a rehearsal and performance venue. All well and good but it had no licence: the performances were illegal. I have no doubt that there are some very competent Liverpool City Council officers and DCMS officials, but if they cannot get it right who can?
	I have even more recent examples of the anomalies of the Licensing Act in its treatment of live music. From 23 June under the Play Me, I'm Yours scheme, 30 pianos will be delivered to the streets of London as part of Sing London and the City of London Festival 2009. Located on streets, in public squares and parks, train stations, and street markets, the pianos are there for any member of the public to play. The pianos will be in place until 13 July, after which time they will be donated to local schools and community groups.
	The initiative, backed by Mayor Boris Johnson, has been widely praised in the national press. However, it turns out that the provision of pianos in this way is caught by the Licensing Act as provision of an "entertainment facility". Without a licence obtained from the local authority, the organisers would be committing a potential criminal offence. It has been a bureaucratic minefield, with every venue and street space that is not already licensed having to be covered either by a new premises licence or a temporary event notice. I could come up with myriad more exemptions.
	Ministers call the new licensing legislation a licensing regime for the 21st century. However, where live music is concerned they actually turned the licensing clock back more than 100 years. A case in 1899 established that a pub landlord could let customers use a piano on his premises without an entertainment licence. Today, such a landlord could face criminal prosecution where the maximum penalty is a £20,000 fine and six months in prison. Contrast that with the freedom to show large screen broadcasts of football matches without a licence under this legislation, because the Government granted that form of entertainment an explicit exemption. What kind of cultural bias does that show?
	Finally, the CMS Committee was rightly very exercised, as many of us are, by the introduction of what is called form 696 by the police. This forces all promoters to provide personal details of artists: names and dates of birth, the music they are playing and their target audience 14 days before an event. Failure to do so has led to the cancellation of performances. This is totally unreasonable, and at variance with the intentions of the Act. When asked, the Government were wholly unable to produce evidence that live music generally is linked to disorder.
	I urge the Government to use this opportunity to state clearly what their intentions are regarding the licensing of live music and to give concrete assurances about their intentions towards amendment of the Act. I beg to move.

Lord Colwyn: My Lords, I am very grateful to the noble Lord, Lord Clement-Jones, for his amendment and his explanation of it. The House has heard that Section 177 of the Licensing Act was a last-minute compromise at a very late stage of the passage of the then Bill in July 2003. The Bill had twice ping-ponged between this House and the other place on the issue of an exemption for small gigs. This exemption had been supported by my party and by the Liberal Democrats, who at the last minute withdrew their support when the DCMS offered Section 177 and an exemption for morris and similar dancing.
	The Section 177 amendment demanded by this House before the Bill could be approved was intended to protect certain forms of live music in small premises. The whole process exposed the Act's absurd overregulation of the most innocuous live music against the light touch for canned entertainment, such as big-screen sport in bars. The Act effectively removed the old "two in a bar" rule that since 1961 had been available in premises as an exemption from the general requirement to hold a public entertainment licence for live music. As I said in the debate on 4 June, the restrictive legislation had serious implications for jazz.
	I am sure that the Liberal Democrats have regretted their decision. Section 177 is notoriously difficult to understand; it is not any kind of exemption, merely a suspension of certain live music licence conditions in venues already licensed for live music up to a capacity of 200 people.
	The noble Lord has explained Section 177 very clearly. It is a complex, probably unworkable provision, introduced in the late stages of debate in the Licensing Bill in June 2003. As far as I am aware, no venue and no local authority has ever used it. It is likely that only a small number of premises will want to take advantage of these exemptions, which would be of limited value to most commercial operations. There is no exemption from actually holding the required licence. The Government considered that such exemptions were not necessary to protect live music, but were forced to compromise in this House to secure the passage of the Bill.
	Amending Section 177 to create an outright exemption for certain small gigs would go a long way to meeting the demands of the Musicians' Union, the former Live Music Forum and the tens of thousands of musicians and music lovers involved with this debate over many years. With a little imagination, such an amendment could extend exemption to other premises, venues such as hospitals or schools that are not usually licensed for live music.
	If the public need protection from small gigs, as is so often insinuated by the Government, there is a plethora of legislation already in place to address the risk of noise, nuisance, crime, disorder and public safety. How else could big-screen sport in bars escape entertainment licensing?
	The amendment of the noble Lord, Lord Clement-Jones, draws attention to the Government's failure, despite many promises and the recent recommendations of the Culture, Media and Sport Committee, to implement any exemption for small-scale performances. Bearing in mind the high level of interest in matters relating to licensing and the concerns expressed by some local authorities, the Government's recommendation is surprising. I support the noble Lord's amendment.

Lord Redesdale: My Lords, I should perhaps give some history. The noble Lord, Lord Colwyn, has alluded to the great battles that we had over the Licensing Act 2003. I declare an interest as chairman of Best Bar None, which looks at improving the safety of pubs and nightclubs in the night-time economy. I have a great understanding of this issue and have talked to many publicans about it. Therefore, although the Minister's words sounded very positive, I meet them with a slightly hollow laugh because we have been arguing over this for a long time.
	The noble Lord, Lord Colwyn, who has moved from his place quite dramatically in the last couple of seconds, said that the Liberal Democrats retreated from their position. He knows that we have fought this for a very long time. Before the Licensing Act we both took part in a stunt to prove how important live music was. We played in the Red Lion pub. When the noble Lord wanted to blow his own trumpet, as a member of the jazz group, we had to throw him out because he would have been the third person to take part in a performance, which would have been illegal. Of course, we did not get much publicity because it happened to be the same night that the noble Lord, Lord Archer, received his four-year holiday from the House and the press seemed to be rather more interested in that. I could never understand that.
	It was an issue that we then took into the debate on the Licensing Act because we thought that the "two in a bar" rule was unfair. It stifled a great deal of creativity. We thought that the Licensing Act would give us great freedom and the rules would be opened up. Indeed, the noble Lord, Lord McIntosh of Haringey, said:
	"What the Bill does is to make it much cheaper and easier to get a licence where one is needed".—[Official Report, 3/7/03; col. 1050.]
	He went on to say that there would be a great explosion of live music, which did not turn out to be the case. I have talked to many publicans and the amount of red tape and bureaucracy, and the difficulty of understanding the regulations, mean that nolicensing will go forward. This morning on the radio there were some buskers playing in a square, which was against the Licensing Act. I am sure that nobody at the radio station understood that. There was that large spontaneous dance at Liverpool Street, which was totally against the Licensing Act. There are many examples, which people laugh off, but a publican faces large amounts of regulation and could lose his licence— and therefore his income and livelihood—or even face six months in prison or a £20,000 fine over this. I find such penalties incredible. If you said that this was a law passed by a one-party state, I could understand it, but it was passed by the Government, claiming that they are doing something to increase the amount of live music.
	I find it almost laughable that the Department for Culture, Media and Sport can hold its head up and call itself cultural. We fought very hard for live music. I know that the noble Lord, Lord Colwyn, is taking a personal pop because I was the one who had to stand down. People tend to forget that we took this to a record number of Divisions. I never get the credit for this so I am going to say it now and blow my own trumpet in the same way that the noble Lord has done many times. If we had taken it to a further vote, it would have stood as a record for the number of times that we have ping-ponged a single issue between the two Houses. It was at that point that the Secretary of State in another place, the right honourable Tessa Jowell, offered me morris dancing. I had 600 morris dancers dance in honour of the DCMS in Trafalgar Square. The Act would have killed morris dancing. At the last minute, when the Secretary of State offered me morris dancing on the phone, I said, "Excellent. You are offering morris dancing. You have got your Bill". She thought that she had gone too far and said, "It does not include cloggers". There was an intake of breath from another DCMS official on the line; I had not realised that it was a conference call. Another voice on the line said, "Secretary of State, it does include cloggers". That is so good, because clogging would have been killed as an art form in this country. I take this opportunity to hope that the Minister will back morris dancing at the Olympic opening ceremony, to show that the DCMS backs culture in this country.
	The problem with the amendment is that it sounds as if the Minister has suddenly spotted a slight problem with the way in which the Licensing Act has been dealt with. The Act has been a massive constraint on live music in this country and has destroyed a vibrant and economic area of the country. Large numbers of bands that have made great wealth for the country started in the pubs and clubs, and they are being denied that opportunity. If we can have live-screen TV—we know that there has been disorder because of live-screen TV, even though it was denied that that would happen—but we cannot have live music when people playing in a pub tends to calm the situation rather than causing violence, we must address the situation. I hope that the Government do not use this as an opportunity to bring something forward and then not keep their eye on the ball, so that we end up with a bureaucratic mess that causes so many problems.

Lord Howard of Rising: My Lords, any attempt, however modest, towards reducing bureaucracy and the burden of red tape must be welcomed. Before going further, I declare some interests. I am a district councillor. I own an ancient monument and have to apply for a licence under the Act, and I am chairman of the National Playing Fields Association as well as chairman or president of my local football and cricket clubs.
	On a previous occasion when Section 182 guidance of the Licensing Act 2003 was debated at the instigation of the noble Lord, Lord Clement-Jones, speaking for the Government the noble Lord, Lord Davies of Oldham, commented that their Lordships were using the occasion to debate the main principles of the 2003 Act as much as debating the guidance which was the subject of the debate. It is difficult to debate any aspect of licensing without a reference to some, if not all, the problems created by the 2003 Act. I speak in the hope that one day the words spoken in this House will fall on more fertile ground than they have done so far.
	The noble Lord, Lord Clement-Jones, has spoken far more ably than I could on licensing and music, assisted by my noble friend Lord Colwyn and the noble Lord, Lord Redesdale. I again draw to Her Majesty's Government's attention that the 2003 Act has imposed a disproportionate burden on small organisations, such as social and sports clubs, especially in rural areas where bar receipts can constitute a significant part of income. It is difficult in small country communities for money taken out of the community in the form of licence fees to be replaced from other sources.
	The Culture, Media and Sport Select Committee in another place recently commented that it was highly unsatisfactory that not-for-profit and sporting clubs with modest turnover and laudable aims should be treated in exactly the same way as commercial operations. The committee also concluded that although the Act had improved the process the system was still too bureaucratic, complicated and time-consuming.
	Recent press reports have said that the noble Lord, Lord Carter, is leaving the Government in July after presenting the Digital Britain report. I cannot say that I blame him, although I am sure that it will be a loss for the Government. I hope that he will listen to what has been said today and, before he goes if he is indeed leaving, make the point to his successor that there are issues that need addressing.
	Before finishing, I should comment that the wording in new Section 41B(3)—
	"could not have an adverse effect"—
	is the same wording used in new Section 86B(3)(a). It is hardly ever possible to say that something could never have an adverse effect. The adverse effect might come from something exceptional and improbable, but if it could happen, however unlikely the event, the order says that the local authority must reject the application. Perhaps the Minister could confirm that the intention behind the wording is for it to be in ordinary or reasonable rather than any or exceptional circumstances.
	The Minister might also clarify the wording on the 15-day limit, which says that if approval for an application is not given within 15 days then it is automatically rejected, although a reapplication can be made. The reapplication, and any subsequent ones, could equally be ignored under the 15-day rule, thereby allowing the application to be rejected without giving any reason as is required in new Section 86C(5), the last paragraph in the order. I would be grateful if the Minister could confirm that the Government do not intend the order to be used in that way.

Lord Carter of Barnes: My Lords, although this debate has not packed the Chamber with the same number of noble Lords as the previous debate, I, for one, recognise its importance. Indeed, tomorrow I shall be making an Oral Statement to the House on the Government's White Paper following the conclusion of the work on Digital Britain where, among other things, we shall discuss the future of digital radio. I have long held the view that that has the potential to be a driving force for providing outlets and support, particularly for niche music interests and, indeed, for jazz.
	I have sympathy with the issue, then, and as noble Lords, particularly the noble Lord, Lord Clement-Jones, may know, I have had the good and occasionally challenging fortune to have spent quite a bit of time in the past nine months with the music industry on this issue, among others. While I am afraid that I do not have the history in my mind that other noble Lords have of the debates on what became the Licensing Act—I am not overly complaining about that—I am well aware of the level of passionate support on this question, particularly from colleagues on the Liberal Democrat Benches. I was not surprised, then, at what could be described as the astonished explosion of passion on this issue tonight. The Government are well aware of the arguments, particularly the debates that still rage around Section 177.
	I shall try to answer the specific points raised by the noble Lord, Lord Clement-Jones, and other speakers who supported him. I shall come back to deal with some specific questions on the minor variations point later. I am afraid that I shall disappoint the noble Lord by saying that the Government cannot agree that the Licensing Act has made it harder to put on live music. Indeed, as the noble Lord will know, the Live Music Forum chaired by Feargal Sharkey, who also now chairs UK Music, found that the Act had had a neutral impact on live music, while the Live Music Survey in 2007 indicated that there had been a 5 per cent reduction, but that licensing was rarely a factor in decisions about whether to put on live music. In fact, in 2008-09, live music provision increased in licensed premises by nearly 8 per cent and, with the addition of members' clubs, there are now more than 90,000 venues licensed for live music.
	Nevertheless, the Government recognise that there is evidence to suggest that small-scale, informal gigs may have been negatively affected by the Act. We believe—I checked this in the briefing I received—that the Government have tried to honour their commitment to explore options for further live music exemptions. As I am sure noble Lords will know, discussions were held last year with musicians' organisations, local authorities and others on draft exemptions for small live music events. However, I have been reliably informed—and I pressed officials on this point—that it proved impossible to agree on exemptions that would deliver an increase in live music but still protect the rights of local residents. It is not the case that the Government have turned their eye to this question, but rather that we have sought to find a balance of interest. On this basis, the Government have agreed with the Musicians' Union and the LACORS to explore other ways of encouraging live music.
	While I understand the noble Lord's frustration on some of these questions, I was slightly disappointed that he dismissed the entirety of the benefit of the minor variations. Our view is that the minor variations bring some advantages, for live music in particular. We think that the minor variations process, appropriately implemented, will help venues to put on more small live music events. The statutory guidance states:
	"It is the Government's intention that applications to vary a licence for live music should benefit from the minor variations process unless there is likely to be an adverse impact on the licensing objectives".
	The Musicians' Union, which the noble Lord, Lord Clement-Jones, mentioned, is one of the bodies we have engaged with and is the main body representing musicians. It recognises the potential of minor variations to increase live music provision. It has formed a new group with local authorities to explain and promote the benefits of the new process for live music. The group is also developing a communications programme to explain the current exemption for incidental music, which we accept has had a limited effect, and will see whether it can tackle other live music issues as they arise. We share the noble Lord's view that these measures will help to deliver an increase in small live music events. The Government undertake to review the situation in a year's time when the minor variations and the other initiatives outlined have had time to take effect. If necessary, we will revisit the subject of exemptions.
	I am sure the noble Lord, Lord Redesdale, will take up the question of Olympic endorsement for morris dancing with my colleague in another place. The amendment moved by the noble Lord, Lord Clement-Jones, was supported by the noble Lords, Lord Colwyn and Lord Redesdale, and I ask that the House reject it before I return to answer the other questions posed.

Lord Clement-Jones: My Lords, I thank the Minister for that reply. Strangely enough, when I started thinking about the kind of response that I was going to put to the Minister, even before this debate, I wrote "disappointing". The Minister rightly anticipated that I am pretty disappointed by his reply. I suspect that he feels that he is coming into a conversation that has been taking place for some time, but it is an important conversation for the future of live music. We all thought the Government were taking part in the conversation, but it now appears that they have almost given it up, which is rather sad.
	I thank my noble friend Lord Redesdale and the noble Lords, Lord Colwyn and Lord Howard of Rising, for their contributions, all of which were extremely constructive and reveal some of the flaws not only in the current Licensing Act, but in the minor variations order. I enjoyed the contribution of the noble Lord, Lord Colwyn. I am always willing to have my tail twisted in that fashion. At the time, we accepted a new Clause 117 in good faith, and we have now been able to repent at leisure, having seen that it is a completely useless clause that nobody has taken advantage of throughout the history of the Licensing Act 2003.
	We still appear to be going backwards. The noble Lord, Lord Carter, talked about the impact of the new minor variations order on live music, but I thought that, forensically, the noble Lord, Lord Howard, had it absolutely right. This is a minnow of an order, but such as it is, as a lawyer, I could come up with all kinds of objections under it.
	"The variation proposed in the application could not have an adverse effect on the promotion of any of the licensing objectives".
	If I had taken the order seriously, I would have made points similar to those made extremely well by the noble Lord, Lord Howard. Frankly, the order will not give rise to a greater amount of live music in small venues or in social and sports clubs.
	I am not going to push the amendment to a vote. Frankly, I do not think this minnow of a minor variation order merits it. As the Minister knows, over both tobacco advertising and casinos, I have been quite prepared to do the Government's work for them and prompt them into action. As regards live music, the Culture, Media and Sport Select Committee has made it plain that the Licensing Act needs primary legislation to ensure that the necessary exemptions for live music are created. It seems extremely sad that the Government appear to have given up the ghost in the face of objections from the LGA.
	I therefore intend to introduce a Private Member's Bill that will provide a conditional exemption for live music in small venues licensed under the Licensing Act 2003. This exemption will be conditional on Section 177, which will be triggered so that a licence for live music can be reviewed, and if complaints by local residents are made, then there can be a full, proper hearing. The second element of the Private Member's Bill will be to reintroduce the two-in-a-bar rule so that any performance of unamplified live music by up to two people will be exempt from the need for a licence. Thirdly, the Private Member's Bill will provide a total exemption for hospitals, schools and colleges from the requirement to obtain a licence for live music when providing entertainment where alcohol is not sold and the entertainment involves no more than 200 people.
	I look forward to debate on that Private Member's Bill, which I hope to persuade Members of this House, and later the Government, to support. I know that those provisions will have great support, not only down the other end of this building through the Culture Media and Sport Select Committee, but also from all those who have an interest in the spread of live music in small venues. I withdraw my amendment at this point but I look forward to future debate.
	Amendment withdrawn.

Lord Carter of Barnes: My Lords, I thank the noble Lord for the gracious and considered manner in which he withdrew his amendment. I am always shocked to the core by his disappointment and I hope it will not be repeated tomorrow. This debate clearly needs to continue and the Government acknowledge that there is a legitimate debate still to be had around Section 177. It is unreasonable to characterise the Government as being completely in awe of the LGA's response—although it is a voice—and we look forward to the debate.
	I know I may be slightly out of order, but I was asked a question in the debate on that amendment around the relevance of Form 696 and I wanted to clarify—

Baroness Anelay of St Johns: My Lords, with some reticence I interrupt the noble Lord, Lord Carter, who is well respected in these matters. I am confused with regard to the procedure we are following this evening. Clearly, I will have to take it up tomorrow to inquire whether the Government intend to introduce a new procedure for the putting of a Motion. I understood the Minister to say very courteously that he intended to answer particular questions after the Motion. It is our custom that questions are answered before the vote on the Motion is put and that the whole of these proceedings are concluded when the noble Lord, Lord Clement-Jones, in this case, withdraws his amendment. Therefore, we are in uncharted waters but we are a self-regulating House. I feel that noble Lords wish to hear what the Minister has to put on the record but it is perhaps an unwise development tonight.

Lord Brougham and Vaux: My Lords, it is my mistake. I should have put the Motion straight away.
	Motion agreed.
	Sitting suspended.

Political Parties and Elections Bill

Main Bill Page
	Copy of the Bill
	Explanatory Notes
	Amendments

Report (1st Day) (Continued)

Amendment 31 not moved.
	Clause 11 : Control of donations to members associations: responsible persons
	Amendment 32
	 Moved by Lord Tunnicliffe
	32: Clause 11, page 11, line 44, at end insert—
	"A notice of alteration takes effect on the day on which it is received by the Commission or (if later) on such date as may be specified in the notice."

Lord Tunnicliffe: My Lords, these are technical amendments to Clause 11 on the control of donations to members' associations. The amendments do not materially alter the policy intentions here: rather, they are intended to ensure that the clause is as clear as it can be and that the procedure to be followed when giving a notice for the purposes of these provisions is easily understood. As has been helpfully noted in previous debates, members' associations are often voluntary organisations and we must make sure that provisions regulating them are free of the potential to confuse.
	Specifically, Amendment 32 seeks to add clarity to the process of making an alteration to an existing notice appointing a responsible person. The amendment explicitly states that a notice of alteration takes effect from the day it is received by the commission or from a particular date specified in the notice. Previously, the clause did not explicitly state when a notice of alteration would take effect, which could have led to a potential dispute over the date on which the appointment took effect. This could be unhelpful; for example, in a case where it is not clear who is acting as the responsible person for a members' association on a particular date, which could be important if called into question as part of an investigation.
	Amendment 33 clarifies that a notice appointing a responsible person has to be in force for a minimum of 12 months from the point that a donation is received or a loan entered into which triggers the requirement to appoint a responsible person. This was already implicit in the provision given in Clause 11(4)(b), which states that a notice appointing a responsible person,
	"shall lapse at the end of the period of 12 months'.
	But it was not explicit that the notice appointing a responsible person could not be terminated before 12 months had elapsed. This amendment puts that requirement beyond doubt.
	This is a small but important clarification, given that one of the key benefits of the policy-reforming regulation of members' associations is the fact that an identifiable individual will be responsible for complying with the requirements of the Political Parties, Elections and Referendums Act 2000 and liable for any failures to comply with that Act. The benefit of this policy is increased by retaining that individual in post for a significant period. If the members' association could appoint somebody when it receives a reportable donation and then terminate that person's appointment immediately, the benefits of the policy would be significantly reduced. It is also worth noting that the requirement does not prevent a change in the responsible person in-year: the provisions in the Bill already allow for a notice of alteration, altering any details of the responsible person. I hope that noble Lords will agree that these amendments represent sensible clarifications of this clause.
	Amendment 34 is a technical amendment concerned with Clause 12 on compliance officers. Specifically, it relates to the way in which a holder of elective office, or the compliance officer himself, may inform the Electoral Commission of an alteration to the arrangements under which the compliance officer has been appointed. The Bill already provides a notice of alteration procedure which allows any necessary changes to be made, including the appointment of a new officer. It also enables the commission to be kept up to date when a compliance officer's details, such as their home address, change during the period for which he or she is appointed. I will not speak at length as the amendment is simple and I hope that it will be welcomed, bringing as it does a little additional clarity to new paragraph 18(7) of Schedule 7 to PPERA, as inserted by the clause. This is the provision for giving an alteration notice to the commission. This amendment mirrors that to Clause 11.
	This amendment will add an additional line clarifying the proper effect of a notice of alteration by plainly stating that an alteration contained in a notice takes effect from the date of receipt of the notice by the commission. Alternatively, it will take effect on a date specified in the notice. I hope that this clarity could help to avoid potential disputes over responsibility that could arise; for instance, if the commission was investigating a donation received during a period of transition between individuals in a compliance officer role. I hope that this clarification will be welcomed.
	I turn now to Amendments 35 through 37 and 40 through 63. Clause 16 of the Bill and Schedule 4 to the Bill propose to put in place new regulations applying to donations from unincorporated associations—UIAs. These provisions would require unincorporated associations donating more than £25,000 in a calendar year to any recipient or combination of recipients regulated by PPERA, including political parties, to be subject to a new reporting regime, requiring them to give details to the Electoral Commission of those that had given significant sums to the association. A significant sum in this sense means a sum of more than £7,500. The amendments that I have tabled will extend the scope of this regime so that it covers situations where unincorporated associations exceed the threshold by means of giving a loan instead of, or in addition to, a political donation.
	I regret that loans were not covered when we originally tabled these provisions. However, I am keen to ensure that we do not leave any loopholes that could ultimately jeopardise our objective of the transparency regime for unincorporated associations—that of bringing much greater transparency to the source of political funding. Without the amendments before us today, I fear that Clause 16 and Schedule 4 as they stand could give rise to situations where UIAs choose to give loans to parties and regulated donees rather than donations, to avoid the additional disclosure requirements. Let me assure noble Lords that I am also anxious to ensure that the provisions do not place an unnecessary and disproportionate regulatory burden on unincorporated associations.
	I will explain the detailed effect of the amendments and in so doing set out the ways in which we have sought to minimise the burden of the requirements. I will talk in detail only on the substantive amendments in this group, rather than trying to address each amendment individually in detail. It is worth my saying at the outset that these amendments do not fundamentally alter the underlying policy or the detailed requirements applying to unincorporated associations. There are two exceptions to this, however. One is the key change that means that loans from these associations to regulated entities now fall within the new regime and have to be counted by an unincorporated association when calculating whether the £25,000-plus threshold—and the ensuing reporting requirements—has been triggered. The second is that we wish to make it clear that the statutory instrument that defines what sorts of gift have to be reported by an unincorporated association may include loans of money to unincorporated associations in excess of £7,500.
	Amendments 35 and 36 to Clause 16 clarify that the scope of these provisions has been broadened so that loans as well as donations made by unincorporated associations may trigger the reporting requirements. This is done by replacing the word "donations" with the term "contributions" or "political contributions". The majority of the amendments in this group are intended to carry through this change. Amendment 37 relates to the powers available under Section 62 of the Electoral Administration Act 2006 to allow the Government to put in place a regime for regulating loans to third parties and permitted participants in referendums. The amendments make it clear that those powers may amend Schedule 19A to ensure that such loans would be counted as "political contributions" and would count towards whether the £25,000-plus threshold had been exceeded.
	Amendments 40 to 46 flow on from the broad effect of Amendments 35 and 36 by providing that, where a UIA's "political contributions" exceed the £25,000 threshold in a calendar year, it will be required to notify the Electoral Commission of that fact within 30 days. A UIA could exceed the threshold in several ways, such as by the making of a single donation or loan or by the making of several donations or loans over the recordable threshold, whether they are to the same recipient or to different recipients. As before, the result of exceeding this threshold is that the requirement to report gifts received by the association in question will then kick in.
	Amendment 47 defines "political contributions" for the purposes of the additional reporting requirements on UIAs. The provisions as drafted already mean that relevant donations from UIAs to registered parties, regulated donees, recognised third parties and permitted participants can trigger the additional reporting requirements. The amendments that I have tabled mean that, in addition, the reporting requirements can be triggered by relevant regulated transactions, such as loans to parties or controlled transactions such as loans to regulated donees.
	Amendment 51 clarifies that in the case of loans or other regulated or controlled transactions, the value of the contribution that counts toward an assessment of whether the £25,000 limit has been reached is the actual money loaned or liability discharged. This differs from the 2000 Act, under which the value of the loan or other regulated transactions is taken to be the value contained in the regulated transaction under which the loan, credit facility or security is made. This means that, for example, a political party, in declaring a loan to the Electoral Commission, is required to declare the maximum amount that can be drawn down under the terms of the loan. By contrast, the proposal here is to look at how much money is actually lent. The latter approach is justified in Schedule 19A to the 2000 Act, which is inserted by Schedule 4 to the Bill, because, in our judgment, the provisions ought to be as straightforward and easy to operate as possible.
	This is particularly true given that UIAs are not otherwise directly regulated by the Electoral Commission. This straightforward approach will mean that UIAs will have certainty, knowing as they will that all outgoings from them to political parties or other regulated recipients, whether in the form of donations, loans or a combination of both, could trigger the requirement on them to provide additional information about funds they have received.
	Amendment 63 extends the ability of the Secretary of State to define the meaning of "gift" in secondary legislation so that it can include loans and securities received on non-commercial terms by an unincorporated association. Unincorporated associations that trigger the reporting requirements under the terms of the new transparency regime will be required to report gifts to them in excess of £7,500. By virtue of this amendment, regulations may provide that those gifts might comprise donations or loans at preferential rates. Provisions setting out the detail of how unincorporated associations should value such gifts—that is, how they should decide whether a gift is worth more than £7,500 and should be reported—will be made in the same regulations after the passage of this legislation.
	Requiring UIAs to provide information about loans they receive as well as donations is necessary since failure to require such information might result in UIAs seeking "loans" to avoid having to reveal any information about their supporters. That would clearly run counter to the objectives of the unincorporated association provisions, which have already been agreed. However, in drafting this sort of provision in regulations, we will of course be mindful that the resulting provisions must be well understood so that the reporting requirements can be complied with, without undue further burdens or complexity being imposed.
	I believe that Clause 16 and Schedule 4 will bring additional transparency to large donations to political parties and other elements of the system. Since these provisions, which bring much desired greater transparency to donations from unincorporated associations, were tabled on Report in another place, I am pleased to say that they have commanded a broad political consensus, especially in this House. I hope that we can proceed on a similarly consensual basis on the amendments that I have tabled which make the scheme more transparent by removing the potential incentive for UIAs to change behaviour to avoid the additional reporting requirements. I commend all the amendments to the House. I beg to move.

Lord Tyler: My Lords, I think that we are all grateful not just to the Minister this evening for explaining the rationale behind the amendments but also to his team for writing to us and explaining the background. Although these issues may not seem as controversial as some of those which we have discussed earlier, they are very important because they close some potential loopholes. If we have learnt nothing else from the way in which this whole issue has been addressed over the years—not just in this Bill—it is that attempts to find loopholes constantly cause us concern, and I am sure that there will be greater ingenuity in future.
	We should congratulate Ministers and their team on the way in which they have tackled the particular problems of unincorporated associations both in Clause 16 and, perhaps even more so, in Schedule 4. I notice, for example, that Amendment 47 contains very careful explanations of how loans can be used in a way which is clearly just the same as a donation and which in the case of an individual donor would be treated in effectively the same way as a donation. It is entirely right that the Minister is spelling out, for example in new sub-paragraphs (2)(b) and (2)(d), the ways in which, if the amendments were not incorporated in the Bill, these loopholes could be used as a way of getting around the spirit of the Bill.
	I will make one further point. I am sure that the Minister and his team are fully confident that the generic term "contribution" is sufficient to cover all the potential problems and that the definition is sufficiently substantial and resilient to resist any challenge from our legal friends. I notice in Amendment 125, which is not part of this group but nevertheless flows from it, the change in title. It is spelled out in slightly more detail as "loans and related transactions", which seems more comprehensive than simply "contribution".
	These are sensible amendments. We are grateful to Ministers for explaining them in detail this evening and also in the letters that they have sent to prepare us for the changes. We welcome them.

Lord Henley: My Lords, I, too, am grateful to the Minister for taking so much trouble to explain to the House the 27 amendments in some 14 minutes—and also for writing to us, setting out the various government amendments, including these, that would come before us. I think that the letter was sent by his colleague, the noble Lord, Lord Bach, on 9 June. We are grateful for the clarity that the Minister has added to matters. He might have got away with a slightly shorter introduction to these amendments by using the letter that he had already sent out; but no doubt he felt that it was important to get it all on the record; and no doubt, should a Pepper and Hart situation arise, it will be useful to have the full and considered response of the Minister to the amendments. We have no objection to the amendments, we are grateful for the explanation and we look forward to seeing them in the Bill.

Lord Tunnicliffe: My Lords, I thank both noble Lords for the support that they have given to however many amendments it was—27. I fear that it was necessary for me to read into the record the various reasons. I did it as quickly as I could. If I had gone faster, it would have taken more time. I am assured by officials that "contribution" is sufficient to cover all relevant matters. I am assured that it is defined as "loans and donations" by government Amendment 51. I beg to move.
	Amendment 32 agreed.
	Amendment 33
	 Moved by Lord Bach
	33: Clause 11, page 12, line 4, leave out "A notice under this paragraph" and insert "A notice under sub-paragraph (1) that has been in force for at least 12 months"
	Amendment 33 agreed.
	Clause 12 : Control of donations to holders of elective office: compliance officers
	Amendment 34
	 Moved by Lord Bach
	34: Clause 12, page 14, line 46, at end insert—
	"A notice of alteration takes effect on the day on which it is received by the Commission or (if later) on such date as may be specified in the notice."
	Amendment 34 agreed.
	Clause 16 : Reports of gifts received by unincorporated associations making donations
	Amendments 35 to 37
	 Moved by Lord Bach
	35: Clause 16, page 17, line 36, leave out "donations" and insert "contributions"
	36: Clause 16, page 17, line 39, leave out "donations" insert "contributions"
	37: Clause 16, page 18, line 20, at end insert—
	"( ) In section 62 of the Electoral Administration Act 2006 (c. 22) (regulation of loans: power to make provision for candidates, third parties and referendums), after subsection (3) there is inserted—
	"(3A) The provision that may be made by virtue of subsection (3)(e) includes, in particular, provision amending paragraph 1 of Schedule 19A to the 2000 Act (requirement for unincorporated associations to notify Commission of political contributions over £25,000) so that, in the case of a recognised third party or a permitted participant in a referendum, a "political contribution" includes a relevant matter.""
	Amendments 35 to 37 agreed.
	Consideration on Report adjourned.

House adjourned at 9.48 pm.